Ad growth slowdown, new rules headwinds for Zee Entertainment stock

Valuations appear attractive, but near-term concerns remain

The Zee Entertainment stock has shed about 41 per cent over the last year because of the promoter pledge issue, slowing advertising revenue growth, and regulatory changes. While the overhang because of the ad growth slowdown and subscription rates will remain, some brokerages are turning positive on attractive valuations and reducing promoter pledge-related concerns.

CLSA believes that the company will continue to outperform the sector and expects a recovery in its cash flow. It estimates that the cash flow will recover in the March quarter of FY20, and the company will register 11 per cent annual earnings growth over the