Zee Entertainment Share Price Jumps 7% Before Fund Raise Meeting

Zee Entertainment shares surged by 7% during the afternoon session on July 12 following the company's announcement about considering a fund-raising initiative through the issuance of securities.

At 12:25 pm IST, Zee Entertainment share price were trading at ₹157.3 per share on the BSE, marking a 6.9% increase. The company's board is scheduled to meet on July 16, 2024, to discuss and approve the raising of funds through the issuance of appropriate instruments.

In a filing with the stock exchanges, Zee Entertainment stated that it plans to raise funds by issuing equity shares and/or other eligible securities in multiple tranches. These could include private placements, qualified institutional placements (QIPs), preferential issues, or a combination of methods.

On June 19, the company's CFO, Rohit Kumar Gupta, resigned for personal reasons. Zee Entertainment has appointed Mukund Galgali, head of the company's commercial and strategic initiatives for the past 17 years, as the interim CFO.

In June, Zee's board granted in-principle approval to raise up to ₹2,000 crore through the issuance of shares or eligible securities. This decision follows the cancellation of a $10 billion merger with Sony in January of this year.

Over the past year, Zee Entertainment share price have fallen by 22%, in contrast to the 26% rise in the benchmark Nifty 50 index.

In its Q4FY24 earnings update, ZEEL reported that significant work is underway to implement identified margin improvement initiatives across the business. The company expressed increased confidence in its performance enhancement plan, although it noted that the Q1FY25 (April to June quarter) would incur higher one-time costs related to these interventions, which would offset underlying operating performance improvements and soften margins.

ZEEL expects gradual margin improvements to begin in Q2FY25, with FY25 margins anticipated to be significantly better than those in FY24. The company aims to achieve an industry-leading EBITDA margin of 18-20% by FY26.

Emkay Global Financial Services noted that in Q1FY25, ZEEL's performance might be affected by a shift in advertisement spending. The brokerage firm projects a marginal year-on-year growth of 2% in Q1 ad revenues. Subscription revenues are expected to continue steady growth, supported by the implementation of price hikes, while other sales and services should benefit from two movie releases and syndication deals.

However, Zee’s profitability is likely to be impacted by one-time interventions. The company remains committed to its medium-term target of an 18-20% EBITDA margin by FY26 and 8-10% revenue growth, according to the Q1FY25 result preview by the brokerage firm.