Zee Entertainment on the Rise: CLSA Sees Stock Doubling Potential, Shares Rally 7%

Zee Entertainment Enterprises Ltd. (ZEEL) saw a strong rally in its stock price on Thursday, March 20, as shares climbed nearly 7% during intra-day trading. The surge came after global brokerage firm CLSA issued a bullish outlook on the company’s future performance. CLSA reaffirmed its ‘outperform’ rating on ZEEL, setting a target price of ₹170 per share. This target reflects a potential upside of approximately 70% from the stock’s previous closing price, underscoring the firm’s confidence in Zee’s growth trajectory.

CLSA’s optimistic view stems primarily from expectations of a recovery in Zee’s advertising revenue, which the brokerage believes could act as a key driver for the stock’s re-rating. The firm noted that Zee’s current price-to-earnings (PE) multiple stands at a relatively low level of 8 times, suggesting that the stock may be undervalued compared to its growth potential.

According to CLSA’s analysis, Zee has the potential to achieve a compound annual growth rate (CAGR) of 22% to 33% in terms of EBITDA (earnings before interest, taxes, depreciation, and amortization) and PAT (profit after tax) over the financial years 2026 and 2027. This forecast assumes a modest yet steady 6% year-on-year increase in advertising revenue, which CLSA views as achievable given the improving market conditions and Zee’s strategic positioning in the media sector.

The combination of a low valuation and the potential for strong earnings growth over the next two years has positioned Zee Entertainment as an attractive opportunity in the eyes of CLSA. The brokerage’s positive outlook appears to have boosted investor confidence, as reflected in the stock’s sharp upward movement during the day’s trading session.

Zee Entertainment Shares Surge After CLSA Predicts Strong Future Growth

Shares of Zee Entertainment Enterprises Ltd. (ZEEL) climbed nearly 7% during intra-day trading on Thursday, March 20, following a positive outlook from global brokerage firm CLSA. The firm maintained its ‘outperform’ rating on the stock and set a target price of ₹170, suggesting a potential upside of approximately 70% from its previous closing price. The strong upward movement in Zee’s stock reflects growing investor confidence fueled by CLSA’s optimistic assessment of the company’s future prospects.

CLSA Sees Potential for Stock to Double in 12–24 Months

CLSA expressed confidence that Zee’s stock could potentially double over the next 12 to 24 months, driven primarily by a projected recovery in advertising revenue. According to CLSA, this rebound could lead to a positive re-rating of the stock, which currently trades at a relatively low price-to-earnings (PE) multiple of 8 times — significantly lower than its industry peers. The brokerage firm highlighted that Zee has the potential to deliver a compound annual growth rate (CAGR) of between 22% and 33% in EBITDA (earnings before interest, taxes, depreciation, and amortization) and PAT (profit after tax) over the financial years 2026 and 2027, even with a modest 6% year-on-year (YoY) increase in advertising revenue.

Strong Market Position and Financial Health Support Positive Outlook

CLSA also emphasized Zee’s strategic position in the Indian media landscape. Zee is currently the second-largest television network in India and has been expanding its footprint in the over-the-top (OTT) segment through its streaming platform ZEE5. The brokerage noted that Zee’s EBITDA margin has improved by 9 percentage points from its previous lows, reflecting better operational efficiency and cost management.

In terms of financial strength, Zee stands out for its solid balance sheet. The company is debt-free and holds approximately ₹1,700 crore in cash reserves, providing it with significant financial flexibility to pursue growth opportunities. CLSA pointed out that Zee’s current market cap-to-sales ratio of 1 times reflects a notable discount of 60% to 80% compared to industry heavyweights like the Reliance-Disney joint venture and Sun TV, suggesting that the stock may be undervalued relative to its growth potential.

Promoter Stake Increase Signals Confidence

Investor confidence received an additional boost from Zee’s promoters, who recently increased their stake in the company. In an open market transaction, Zee’s promoters purchased 27 lakh shares valued at approximately ₹27 crore. This move raised the promoter holding from 3.99% to 4.28%. The increase in promoter stake is often viewed as a sign of confidence in the company’s long-term growth prospects.

Brokerage firm Nuvama also commented on this development, stating that the increase in promoter holding is likely to strengthen investor sentiment, particularly among minority shareholders. Nuvama highlighted that promoter stake increases are generally interpreted as a vote of confidence in the company’s strategic direction and future performance.

Competitive Position and Growth Prospects

Zee’s competitive position within the Indian media sector, combined with its improving financial metrics and growth potential, forms the foundation of CLSA’s positive outlook. The company’s ability to grow advertising revenue, strengthen its OTT platform, and maintain cost efficiency are seen as key drivers for future profitability.

The recent surge in Zee’s stock price reflects the market’s acknowledgment of this improving outlook. With a combination of a strong market position, improving margins, financial strength, and growing investor confidence, Zee Entertainment appears to be positioned for a period of potential growth and value creation.

Steady Growth in Subscription Revenue and Recovery Prospects in Advertising Revenue

In addition to highlighting Zee Entertainment’s potential for strong earnings growth, brokerage firms have also noted the company’s consistent performance in subscription revenue. As of the third quarter of the financial year 2025 (Q3FY25), Zee’s subscription revenue has demonstrated steady expansion for seven consecutive quarters. This consistent growth underscores the strength and stability of Zee’s subscription-based business model, which has helped cushion the company’s overall performance amid a challenging advertising environment.

Advertising Revenue Expected to Recover from Q2FY26

While Zee’s subscription revenue remains strong, its advertising revenue has faced pressure in recent quarters. Despite this weakness, brokerage firm Nuvama anticipates a recovery in advertising revenue beginning in the second quarter of financial year 2026 (Q2FY26). Nuvama’s outlook is based on two key factors:

1. Urban Demand Recovery: The brokerage expects a rebound in urban consumer demand, which should create a more favorable environment for advertising spending. As urban consumption patterns stabilize and improve, companies are likely to increase their advertising budgets, benefiting media companies like Zee.

2. Improved Gross Margins for FMCG Players: A significant portion of advertising revenue comes from fast-moving consumer goods (FMCG) companies, which have been under pressure due to rising input costs. However, Nuvama expects lower crude oil prices to improve the gross margins of FMCG players, thereby increasing their ability and willingness to spend on advertising. This, in turn, is likely to benefit Zee’s advertising revenue streams.

Valuation Remains Attractive

Nuvama also pointed out that Zee’s current valuation remains appealing relative to its historical levels. The stock is currently trading at a price-to-earnings (PE) multiple of 10 times, which is lower than its one-year average PE of 14 times. This suggests that the stock is trading at a discount compared to its historical valuation, reflecting the market’s cautious stance despite improving fundamentals.

The combination of consistent subscription revenue growth, the anticipated recovery in advertising revenue, and an attractive valuation underscores Zee’s potential to strengthen its financial performance over the coming quarters. These factors have contributed to the growing optimism surrounding the stock’s future trajectory.

Stock Price Performance Reflects Recovery Amid Broader Weakness

Zee Entertainment’s stock witnessed a notable rally during the latest trading session, climbing as much as 6.6% to reach an intra-day high of ₹106.80. This upward movement reflects renewed investor interest and growing confidence in the company’s future prospects following positive commentary from brokerage firms.

Current Price Position Relative to 52-Week High and Low

Despite the recent surge, Zee’s stock remains significantly below its peak levels from the past year. The stock’s current price is still approximately 37% lower than its 52-week high of ₹168.70, which was recorded in June 2024. This indicates that while the stock has shown signs of recovery, it has yet to regain the highs seen during its stronger performance phase last year.

On the other hand, Zee’s stock has staged a meaningful rebound from its recent lows. Earlier this month, the stock hit a 52-week low of ₹89.29. Since then, it has recovered by approximately 20%, reflecting improved market sentiment and growing confidence among investors. This recovery suggests that the stock may have found some degree of support at lower levels, driven by positive developments in the company’s business outlook and financial performance.

Broader Market and Business Context

The rebound in Zee’s stock price comes amid a broader recovery in market sentiment and improving fundamentals within the company. Positive signals, such as consistent growth in subscription revenue and the expected recovery in advertising revenue, have likely contributed to the renewed buying interest. Additionally, increased promoter stake and favorable valuation levels have further strengthened investor confidence, helping the stock regain some lost ground.

While Zee’s stock price remains below its historical highs, the recent upward trend highlights the market’s improving perception of the company’s long-term prospects. The stock’s ability to sustain this momentum will likely depend on how effectively the company capitalizes on growth opportunities and navigates the evolving media landscape.

Stock Performance Overview

Over the past year, Zee Entertainment’s stock has experienced a significant decline, losing approximately 29% of its value. However, the stock has shown signs of recovery in March, gaining more than 12% so far. This recent rebound marks a shift in momentum, breaking a three-month losing streak.

Before the March recovery, the stock had faced consistent downward pressure over the previous three months. It dropped by 12% in February, followed by a 13% decline in January, and a 6% loss in December. The recent upward movement in March suggests that investor sentiment toward the stock may be improving after a period of sustained weakness.