Zee Entertainment Enterprises reports 169% CAPEX growth in 2016 and 19.9% Revenue growth

10-05-2016 • About Zee Entertainment Enterprises ($ZEEL) • By InTwits

Zee Entertainment Enterprises reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

Zee Entertainment Enterprises is a growth stock: FY2016 revenue growth was 19.9%, 5 year revenue CAGR was 14.2% at FY2016 ROIC 23.6%
Zee Entertainment Enterprises has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.2%. At the same time it's in pair with industry average of 7.1%
CAPEX is quite volatile: ₹3,084m in FY2016, ₹1,147m in FY2015, ₹1,482m in FY2014, ₹751m in FY2013, ₹816m in FY2012
The company has highly profitable business model: ROIC is 23.6%

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

Zee Entertainment Enterprises's Revenue surged on 19.9%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.7 pp from 15.1% to 17.8% in FY2016.

Net Income margin decreased on 2.5 pp from 20.1% to 17.6% in FY2016. During the last 5 years Net Income margin topped in FY2014 at 20.4% and was declining since that time.

Investments (CAPEX, working capital and M&A)

Zee Entertainment Enterprises's CAPEX/Revenue was 5.3% in FY2016. The company showed CAPEX/Revenue growth of 3.2 pp from 2.0% in FY2013 to 5.3% in FY2016. Average CAPEX/Revenue for the last three years was 3.7%.

Return on investment

The company operates at high and attractive ROIC (23.6%) and ROE (22.7%). ROIC increased slightly on 1.5 pp from 22.1% to 23.6% in FY2016. ROE decreased on 3.9 pp from 26.6% to 22.7% in FY2016. During FY2012-FY2016 ROE topped in FY2015 at 26.6%.

Leverage (Debt)

Company's Net Debt / EBITDA is -0.6x and Debt / EBITDA is 0.0x. Debt dropped on 70.8% while cash surged on 32.2%.

Zee Entertainment Enterprises has no short term refinancing risk: cash is higher than short term debt (23,739.0%).

Management team

Zee Entertainment Enterprises's CEO is Punit Goenka. Punit Goenka has 13 years tenure with the company. The company's CFO is Mihir Modi. Mihir Modi has 7 years tenure at the company.

Financial and operational results

Zee Entertainment Enterprises ($ZEEL) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	30,263	36,833	43,699	48,730	58,450	19.9%
EBITDA	7,395	9,543	12,043	12,538	15,095	20.4%
Net Income	5,891	7,196	8,921	9,775	10,267	5.0%
Balance Sheet
Cash	3,283	5,316	5,644	7,365	9,733	32.2%
Short Term Debt	106	154	75	159	41	-74.2%
Long Term Debt	12	17	17	12	9	-25.0%
Cash flow
Capex	816	751	1,482	1,147	3,084	168.9%
Ratios
Revenue growth	0.6%	21.7%	18.6%	11.5%	19.9%
EBITDA growth	-10.0%	29.0%	26.2%	4.1%	20.4%

EBITDA Margin	24.4%	25.9%	27.6%	25.7%	25.8%	0.1%
Net Income Margin	19.5%	19.5%	20.4%	20.1%	17.6%	-2.5%
CAPEX, % of revenue	2.7%	2.0%	3.4%	2.4%	5.3%	2.9%

ROIC	21.1%	24.2%	25.5%	22.1%	23.6%	1.5%
ROE	18.0%	19.6%	26.6%	26.6%	22.7%	-3.9%
Net Debt/EBITDA	-0.4x	-0.5x	-0.5x	-0.6x	-0.6x	-0.1x

Peers in Broadcasting & Cable TV

Below you can find Zee Entertainment Enterprises benchmarking vs. other companies in Broadcasting & Cable TV industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Hinduja Ventures ($HINDUJAVEN)	25.6%	31.8%	29.6%	81.8%	-
Zee Media Corporation ($ZEEMEDIA)	10.6%	-1.7%	11.3%	62.6%	-
Siti Cable Network ($SITICABLE)	12.0%	37.0%	41.6%	36.2%	-
Tv18 Broadcast ($TV18BRDCST)	-	21.4%	16.4%	17.8%	10.8%
Entertainment Network (India) ($ENIL)	-32.9%	9.2%	13.2%	14.0%	-
Median (9 companies)	11.3%	9.2%	22.9%	14.0%	10.8%
Zee Entertainment Enterprises ($ZEEL)	-	21.7%	18.6%	11.5%	19.9%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Hinduja Ventures ($HINDUJAVEN)	27.7%	21.0%	18.2%	54.7%	-
Entertainment Network (India) ($ENIL)	32.1%	30.8%	32.4%	33.3%	-
Raj Television Network ($RAJTV)	-	-	-	29.6%	-
Dish Tv India ($DISHTV)	25.5%	27.3%	26.4%	28.1%	-
Sea Tv Network ($SEATV)	-	-	-	24.1%	-
Median (11 companies)	7.3%	17.5%	18.2%	15.9%	10.3%
Zee Entertainment Enterprises ($ZEEL)	24.4%	25.9%	27.6%	25.7%	25.8%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Siti Cable Network ($SITICABLE)	10.6%	80.9%	73.0%	32.5%	-
Den Networks ($DEN)	12.6%	60.4%	53.2%	28.5%	-
Dish Tv India ($DISHTV)	33.5%	32.2%	11.9%	26.3%	-
Hinduja Ventures ($HINDUJAVEN)	11.6%	65.8%	14.2%	7.1%	-
Balaji Telefilms ($BALAJITELE)	2.4%	1.3%	0.6%	4.3%	-
Median (9 companies)	10.6%	19.0%	13.1%	4.3%	4.3%
Zee Entertainment Enterprises ($ZEEL)	2.7%	2.0%	3.4%	2.4%	5.3%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Hinduja Ventures ($HINDUJAVEN)	8.3%	4.0%	1.0%	39.5%	-
Dish Tv India ($DISHTV)	-2.5%	-4.6%	8.7%	24.0%	-
Entertainment Network (India) ($ENIL)	15.2%	14.8%	16.7%	17.9%	-
Raj Television Network ($RAJTV)	10.1%	10.3%	11.5%	9.1%	-
Tv18 Broadcast ($TV18BRDCST)	-6.4%	2.7%	4.0%	5.3%	5.2%
Median (12 companies)	0.7%	3.3%	4.6%	5.3%	5.2%
Zee Entertainment Enterprises ($ZEEL)	21.1%	24.2%	25.5%	22.1%	23.6%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Zee Media Corporation ($ZEEMEDIA)	0.2x	0.3x	3.0x	10.1x	-
Siti Cable Network ($SITICABLE)	56.0x	9.5x	5.6x	6.7x	-
Den Networks ($DEN)	-0.5x	2.4x	1.7x	6.0x	-
Dish Tv India ($DISHTV)	2.1x	2.6x	2.0x	1.4x	-
Tv18 Broadcast ($TV18BRDCST)	-	2.4x	0.9x	1.3x	1.4x
Median (10 companies)	0.2x	2.4x	1.7x	1.2x	1.4x
Zee Entertainment Enterprises ($ZEEL)	-0.4x	-0.5x	-0.5x	-0.6x	-0.6x

Zee Entertainment Enterprises stock price chart

Zee Entertainment Enterprises financials

mln.	FY2010	FY2011	FY2012

Revenue	58,333	30,088	30,263
EBITDA	6,135	8,220	7,395
Net income	6,344	6,369	5,891
CAPEX	628.6	389.0	816.0
Debt	1,195	17.000	118.0
Cash	5,864	3,856	3,283

About Zee Entertainment Enterprises

Zee Entertainment Enterprises Limited, together with its subsidiaries, operates as an integrated media and entertainment company that is engaged in broadcasting and content development, and production and its delivery through satellite worldwide. The company broadcasts channels, such as Hindi entertainment channels, including Zee TV, Zee Smile, 9X, Zee Anmol, and Zindagi; Hindi movie channels, such as Zee Cinema, Zee Premier, Zee Action, Zee Classic, and &pictures; English entertainment, movies, and life style channels comprising Zee Caf? and Zee Studio; and sports channels, such as TEN Cricket, TEN Action, TEN Sports, and TEN Golf. It also broadcasts regional language entertainment channels, including Zee Marathi, Zee Bangla, Zee Bangla Cinema, Zee Talkies, Zee Telugu, Zee Kannada, and Zee Tamil; religious and alternate lifestyle channels comprising Zee Jagran and Zee Salaam; music channels, such as Zing and ETC; niche and special interest channels comprising Zee Khana Khazana and Zee Q; and HD channels, including Zee TV HD, Zee Cinema HD, Zee Studio HD, and TEN HD. In addition, the company produces and distributes films; sells television content, which includes programs/film rights/feeds; and operates as a space selling agent for other satellite television channels. It has a library housing approximately 1.2 lac hours of television content; and rights to approximately 3,500 movie titles. The company was formerly known as Zee Telefilms Limited and changed its name to Zee Entertainment Enterprises Limited in January 2007. Zee Entertainment Enterprises Limited was founded in 1982 and is based in Mumbai, India.