Any views in the group on Zee’s investment in Sugar Box. Personally not convinced this is a significant technology and if this warrants a Rs 522 Cr investment at this juncture. Metro rail (underground based) seems to be their key customer base. Over a period of time expect mobile service providers to improve signals and connectivity in underground metros which can make Sugar Box redundant. Revenue model of Sugar Box (current revenue at Rs 47 lakhs) not clear. Hope this is not an siphoning exercise by Subhash Chandra / Puneet Goenka. Despite holding less than 5% stake the erstwhile promoters have pushed this investment through with board approval which is still the same bunch of members and has not been changed since the promoter stake reduction.
I see value in Zee once the Chandra / Goenka and their cronies are moved out
Happy for suggestions from others in this group
Disc: Not invested, evaluating investment in Zee Ent
surely negative remarks for the company. And stock price n Pref.share IRR reflecting the same.
Board independence into question still.
Moreover due to low ad spends, overall profitability n cash-flows r expected to shrink.
While company says INR 522 in 2-3 yrs, my opinion is it will not infuse as much quantum and in as much time… as the venture progresses, there is possibility of re-look at investment thesis… but surely, cash burn will be a concern if they go very aggressively without meaningful outcome.
disc; invested in pref shares. It’s current IRR is above 30%. When something is too good to be true, it is indeed too good to be true. Not adding now considering my % allocation
Zee Entertainment Enterprises Ltd.reported a surprise loss in the March quarter due to higher other operating costs and exceptional items.
Net loss stood at Rs 766.7 crore compared with a net profit of Rs 291.7 crore in the quarter ended March 2019, according to its exchange filing. Analysts’ estimates compiled by Bloomberg had pegged profit at Rs 287 crore.
Revenue fell 3.38% year-on-year to Rs 1,951 crore—higher than the Rs 1,868-crore estimate. Operating loss stood at Rs 562.5 crore versus operating profit of Rs 577.7 crore in the year-ago period.
People who are attending the Conference Call, please let us know more about the exceptional expenses.
Lot of corporate governance red flags at Zee. Their investments in related firms, unknown tech companies has come under radar many times. Plus Essel has defaulted so many times that their shares can be sold by mutual funds any time (e.g: Franklin templeton has 100 crore worth shares to sell against default of 600 crore). We might see Zee in double digits soon
The biggest thing in the con-call is that the management is not on top of the numbers. For so many things they say we will provide the information offline. They say governance and transparency is key but when someone asked what were the investments exactly and why the writedown, they don’t give a straight answer… Did not like the con call at all
Yes I agree Concall was little bit un-nerving… and this was expected it was not something new…
I think key takeaways would be
who will be two new independent directors
will we have any more write offs? As per Puneet Goenka… No we won’t…
promoter has only 4.9% stake in company, so how long can Puneet Goenka Sir remain on board without anyone questioning any actions and proving himself. Although he said on call - I am here to stay and get the lost goodwill back.
FII holding more than 65% , can make Zee a good take over candidate?
All in all… It’s a very interesting situation.
Even after red flags - the contents of Zee make it good to invest. Once all tantrums are resolved this can be a good investment.
Inventory = 5347 Cr
Receivable = 2084 Cr
That forms 50% of mkt cap.
Whereas in Sun TV, it is only 1367 Cr, forming 9% of mkt cap.
Is it not Sun TV too good in terms of balance sheet and hence the cash flow which resulted in better RoE and Dividend payout/yield at almost same mkt cap and P/E ? Also, 2021 election is favouring DMK…
Leaving this aside, Zee promoters were able to sell 14.87% stake to various FIIs at 304 / share in Nov-2019 when most of the bad news was already out. Why FIIs paid 19X FY19 EPS ?
Answer of your both questions lies in Zee’s growth , market share and understanding of media business as a whole…
How can you compare Zee with SunTV
How many different channels does SunTV have?
How much market share do they have in each category of channels for e.g. music, cinema, entartainment and news…
do they even have exposure regionally at india level in different languages, if yes how Many languages?
How much has Sun Invested in OTT platform? And can they ever compete Zee in content even if they start investing in OTT
Most importantly what are margins at gross level for Sun even in the areas they are present along with Zee?
I am just trying to say idle balance sheet with cash and balances without growth/Capex/investments … It’s safe…no doubt…but you can’t get more than safety in that…
Personal View… Not a recommendation…nor do I am biased because of my investment… But yes please throw some thoughts on above questions… When you want to compare…
This company is like a ‘kati patang’ in this environment when they don’t have any identifiable promoter left. Media biz is highly politicized and you need an anchor to survive and frankly earnings don’t really matter in the short term. Everyone and his uncle knows that the erstwhile promoter group milked it to its bone due to their debt binge. Financial statements matter when you trust the management. The stock is cheap on the basis of potential market size and OTT success. We invest for the future and without any solid anchor it is a boat with a failed engine. I would wait for any white knight to emerge.
Can you please explain by past record, how Sun TV failed to deliver growth. In fact, it has delivered better growth than Zee and even more importantly, dividend yield is 5.2% and payout is 57% (though promoter holds 75%, they have rewarded minority shareholders) whereas Zee is unable to answer shareholders about its balance sheet and dividend is almost NIL at this crucial phase when promoter is out of the business. Everyone knows Zee’s content, market share, OTT,etc., but what investors need is ethical management and accounting principles which are under a cloud.
