Zee Entertainment Enterprises is an attractive stock for a growth investor
17-05-2016 • About Zee Entertainment Enterprises (
$ZEEL) • By InTwits
Zee Entertainment Enterprises is a fast-growing stock in Broadcasting & Cable TV industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Zee Entertainment Enterprises showed fast growth in the last financial year. Zee Entertainment Enterprises's revenue surged on 19.9% in FY2016. At the same time Zee Entertainment Enterprises well managed its profitability and showed even faster growth in EBITDA of 20.4% for the same period.
In the longer period the company showed fast revenue growth of 16.6% from FY2013 to FY2016 annually. EBITDA surged on 16.5% from FY2013 to FY2016 annually.
Zee Entertainment Enterprises ($ZEEL) financials for the last 5 years
| mln. INR | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Revenue | 30,263 | 36,833 | 43,699 | 48,730 | 58,450 |
|---|
| Revenue growth, % | | 21.7% | 18.6% | 11.5% | 19.9% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 7,395 | 9,543 | 12,043 | 12,538 | 15,095 |
|---|
| EBITDA growth, % | | 29.0% | 26.2% | 4.1% | 20.4% |
|---|
| EBITDA margin, % | 24.4% | 25.9% | 27.6% | 25.7% | 25.8% |
|---|
| Net Income | 5,891 | 7,196 | 8,921 | 9,775 | 10,267 |
|---|
| Net Income margin, % | 19.5% | 19.5% | 20.4% | 20.1% | 17.6% |
|---|
| |
| CAPEX | 816 | 751 | 1,482 | 1,147 | 3,084 |
|---|
| CAPEX/Revenue, % | 2.70% | 2.04% | 3.39% | 2.35% | 5.28% |
|---|
| Debt | 118 | 171 | 92 | 171 | 50 |
|---|
| Cash | 3,283 | 5,316 | 5,644 | 7,365 | 9,733 |
|---|
| Net Debt/EBITDA | -0.4x | -0.5x | -0.5x | -0.6x | -0.6x |
|---|
| |
| ROIC, % | 21.1% | 24.2% | 25.5% | 22.1% | 23.6% |
|---|
| ROE, % | 18.0% | 19.6% | 26.6% | 26.6% | 22.7% |
|---|
Profitability and return on investment
Margin expansion supported EBITDA growth. EBITDA margin showed almost no change on 0.100 pp from 25.7% to 25.8% in FY2016. In the last 3 years Zee Entertainment Enterprises showed almost no change in EBITDA margin of 0.100 pp from 25.9% in FY2013 to 25.8% in FY2016.
We call Zee Entertainment Enterprises an attractive growth stock as together with the growth it delivers high ROIC at 23.6%. Three years ago it was a bit higher at 24.2%. Average ROIC for the last three years was 23.7%.
The company showed big decline in Net Income margin of 2.50 pp from 20.1% to 17.6% in FY2016. If we look for the longer period the company's Net Income margin decreased on 1.90 pp from 19.5% in FY2013 to 17.6% in FY2016.
Zee Entertainment Enterprises operates at ROE of 22.7%. It's average level of ROE for the last three years was 25.3%.
Capital expenditures (CAPEX)
To this fast growth the company had to invest in CAPEX.Zee Entertainment Enterprises's CAPEX/Revenue was 5.28% in FY2016. Zee Entertainment Enterprises showed fast CAPEX/Revenue growth of 3.24 pp from 2.04% in FY2013 to 5.28% in FY2016. For the last three years the average CAPEX/Revenue was 3.67%.
Leverage (Debt)
The company has negative net debt at -0.6x Net Debt/EBITDA - at the same time with high growth. If we look for the longer period leverage surged on 0.10x from -0.54x in FY2013 to -0.64x in FY2016.
Management team
Punit Goenka is a CEO of Zee Entertainment Enterprises and Mihir Modi is a CFO.
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, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| 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, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| 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, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| 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, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| 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
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| 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 |
