Why Is Nuvama Still Positive on Zee Entertainment Despite Weak Q2FY26 Results?
Nuvama has maintained a Buy rating on Zee Entertainment Enterprises Ltd (ZEEL) while cutting its target price to ₹155 from ₹171 following weak Q2FY26 results. The company’s performance reflected sustained advertising revenue pressure and elevated content spending amid efforts to strengthen its regional entertainment portfolio.
Revenue declined 1.6% YoY, broadly in line with expectations, while EBITDA fell sharply by 51% YoY due to higher advertising and one-off launch expenses for two new regional channels. Subscription revenue, however, remained stable with a 5.5% YoY increase, partially offsetting weak ad trends.
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Nuvama attributed Zee’s weak quarter to higher marketing expenditure, particularly for newly launched channels. The brokerage expects a gradual recovery in ad revenue as FMCG ad spending picks up in H2FY26, driven by festive demand and improved consumer sentiment.
EPS estimates were revised downward by 11.5%, 7%, and 7% for FY26E, FY27E, and FY28E, respectively. Despite the near-term earnings cut, Nuvama remains constructive on Zee’s long-term recovery prospects given its strategic cost controls, improved OTT traction, and gradual stabilization of linear TV ad volumes.
The brokerage believes Zee’s cost-optimization drive and renewed focus on monetizing regional content could lead to margin normalization by FY27. However, consistent improvement in ad growth will remain the key catalyst for rerating.
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With digital viewership rising and advertising trends expected to normalize by FY27, Zee remains a tactical play for medium-term investors. The company’s recovery depends on ad-spend revival, operational discipline, and stable OTT growth trajectory.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, notes that while Zee’s near-term outlook remains challenging, its long-term digital integration strategy could drive recovery. Investors should monitor advertising growth and cost discipline before fresh entries. Discover more sectoral insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries
- Will Ad Revenue Recovery Lift Zee Entertainment’s Margins in FY27?
- How Is Zee’s Regional Expansion Strategy Affecting Profitability?
- Can OTT Monetization Offset Linear TV Weakness for Zee?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
