Equity Research | Media & Entertainment © February 20, 2017 Company Update Emkay Your success is our success Zee Entertainment

CMP Target Price Rs529 Rs580 () Confident of outperforming industry Rating Upside growth; upgrade to ACCUMULATE ACCUMULATE () 9.7 %

. We met the management of Z IN to get insights on advertisement outlook, content strategy Change in Estimates and long term subscription revenue trend. Revamping programing hours on flagship EPS Chg FY17E/FY18E (%) 1.7/2.9 GEC i.e. Zee TV in next 2 quarters is the key focus of the management. Target Price change (%) 14.6 . As per our data, the company has acquired higher number of movie titles in FY17 Previous Reco HOLD as compared to last 4-5 years. This, would assist in delivering advertisement growth in FY18 till Zee TV’s viewership share recovers. Emkay vs Consensus . Viewership of regional channels remain strong with leadership position in Marathi, ranked EPS Estimates no.2 in Telugu, Bengali and Kannada GEC’s. Proven track record of gaining market share in FY17E FY18E regional channels and healthy viewership share in &TV (although need for further ramp-up Emkay 11.8 14.4 for timely break-even) keeps the hope high on imminent revival of Zee TV’s market share. Consensus 12.5 16.3 . Continued monetization of strong viewership share in regional channels to aid better than Mean Consensus TP Rs 538 industry’s advertisement growth. For Zee, we are projecting a growth of 14%/15% for FY18/19 (healthy outperformance vs. industry estimates) in entertainment business. Stock Details . The management in the past has indicated possibility of RPS redemption with cash flow from Bloomberg Code Z IN sale of sports business, announcement on the same will be a positive move as it will be Face Value (Rs) 1 RoCE accretive. Upgrade to ACCUMULATE with revised TP of Rs580 (30x FY19E EPS). Shares outstanding (mn) 960 Sustained weakness in Zee TV’s viewership is a key risk to our call. 52 Week H/L 590 / 364 M Cap (Rs bn/USD bn) 508 / 7.58 Increased investment in movie rights to aid advertisement growth in FY18E Daily Avg Volume (nos.) 22,24,681 As stated in Q3FY17 earnings call, Zee has increased investment towards acquiring movie satellite rights. Zee has acquired higher number of Bollywood movie titles in FY17 as Daily Avg Turnover (US$ mn) 15.5 compared to last 4-5 years, which include big ticket titles like Dangal, Raees and others. This, would aid advertisement growth in FY18 till Zee TV recovers viewership share. In the initial Shareholding Pattern Dec '16 years, monetizing satellite rights is margin accretive due to aggressive accounting policy. Promoters 43.1% Zee TV content revamp in-place- hours to inch-up over the next 2 quarters FIIs 46.6% Zee TV has seen reduction in programing hours from 34/week in Q3FY16 to 22-24/week DIIs 4.3% during the last 3 quarters. For FY17, the management had initially guided for 34hours/week Public and Others 6.0% content, which was revised to 30 in Sep’16 which has now been deferred to Q2FY18. Changes in senior management in Zee TV (new channel head has been appointed) is now Price Performance behind us. New shows and story line-up for the upcoming content has been finalized. New (%) 1M 3M 6M 12M launches and increase in programming hours will be closely watched in the ensuing quarters. Absolute 13 18 5 38 Regional channel viewership share remain on strong footing Rel. to Nifty 7 8 3 14 Zee’s regional bouquet has been delivering strong results with sustenance of viewership share in most of the GEC channels despite rise in competition. It has maintained leading Relative price chart Rs % position in Marathi, ranked no. 2 in Telugu, Bengali and Kannada GEC’s. The company has 600 30 recently launched movie channel in Telugu to further strengthen the share. Robust viewership 550 22

share rise in Tamil GEC has been commendable, sustenance of the same would be the key 500 14 for monetization. 450 6 Financial Snapshot (Consolidated) 400 -2 (Rs mn) FY15 FY16 FY17E FY18E FY19E 350 -10 Revenue 48,837 58,515 65,254 73,337 83,039 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 EBITDA 12,538 15,095 18,950 21,763 25,962 Zee Entertainment (LHS) Rel to Nifty (RHS) EBITDA Margin (%) 25.7 25.8 29.0 29.7 31.3 Source: Bloomberg

APAT 9,775 10,551 12,749 14,980 17,965 Naval Seth EPS (Rs) 8.9 9.7 11.8 14.4 17.9 [email protected] EPS (% chg) (3.1) 9.1 21.3 22.4 23.6 +91 22 66242414 ROE (%) 16.6 15.9 21.1 27.3 26.9 P/E (x) 59.3 54.4 44.8 36.6 29.6 Ashish Agrawal EV/EBITDA (x) 39.1 32.3 26.8 23.0 18.8 [email protected] P/BV (x) 9.1 8.2 11.3 9.0 7.1 +91 22 66121241 Source: Company, Emkay Research

Emkay Research is also available on www.emkayglobal.com, Bloomberg EMKAY, Reuters and DOWJONES. Emkay Global Financial Services Ltd.

Zee Entertainment (Z IN) India Equity Research | Company Update

Increased investment in movie satellite rights to aid advertisement growth in FY18 As stated in Q3FY17 earnings call, Zee has increased investment towards acquiring movie satellite rights. Zee has acquired higher number of Bollywood movie titles in FY17 as compared to last 4-5 years, which include big ticket titles like Dangal, Raees and others. This, would aid advertisement growth in FY18 till Zee TV recovers viewership share. At the initial stage, monetization of movies rights is margin accretive due to accounting policy for amortization. Zee amortizes movie rights over the period of 5 years, the same has been in place from last 20years. In our view, a new movie rakes in +50% of its expected lifetime revenue (with 4-5 re-runs) while annual amortization is 20% and some additional marketing spends, this leads to revenue-cost mismatch and push margin upwards in the 1-2 years of movie monetization. Therefore, this also result in rise in inventory. Exhibit 1: Movie satellite rights- Highlighted portion in case of Zee indicates those movies which are yet to be telecasted Zee Entertainment Sony Entertainment Colors Star Entertainment Baaghi Sultan Ki and Ka Housefull-3 Fan Rangoon Mohenjo Daro Rustom Azhar Camaando 2 Dishoom Happy Bhaag Jayegi Te3n Shivaay Aligarh Banjo Rocky handsome Pink Bar Bar Dekho Befikre Akira Neel Batte Sanatta Saala Khadoos Kabali (Hindi) FY17 Kahani 2 Jungle Book Raaz Reboot M.S. Dhoni – The Untold Story Happy bhag jayegi Ae Dil Hai Mushkil Tum bin 2 Raees Mirzya Dangal Sanam Teri Kasam Jagga Jasoos* Singh Is Bliing Baahubali Airlift Baby I (Hindi Version) ABCD 2 Bajirao Mastani Bajrangi Bhaijaan Tanu weds Manu return Detective Byomkesh Bakshy Pyaar Ka Punchnama 2 Drishyam

Dil Dhadakne do Bhaag Johnny FY16

Welcome Back Brothers Talvar Aligarh Dilwale Force2 Prem Ratan Dhan Payo Kapoor and Sons Roy Tamasha Ghayal Once Again Neerja Holiday PK KICK Entertainment Humpty Sharma Ki Dulhania Happy New year Gunday Mary Kom Jai Ho Mai Tera Hero Queen Raja Natwarlal Returns Bang Bang Gulaab Gang Action Jackson FY15 Entertainment Hamshakals Haider Bobby Jasoos Yaariyan 2 States Chennai Express Raanjhanna Mental Besharam Once upon a time in Dobara Go Gone Nautanki Saala Ghanchakkar Chashme Buddor Zanjeer Kochadaiyaan Satyagraha Deal with Subhash Ghai's Mukta FY14 Aurangzeb Boss Arts-Rs 250mn Yeh Jawani Hai Diwani Krish 3 Dhoom 3 Source: Emkay Research, Company. * Expected to release in April 2017. Bold highlights successful performance at box office

Emkay Research | February 20, 2017 2

Zee Entertainment (Z IN) India Equity Research | Company Update

Zee TV content revamp in-place- programming hours to inch-up over the next 2 quarters Zee TV has seen reduction in programing hours from 34/week in Q3FY16 to 22-24/week during the last 3 quarters. For FY17, the management had initially guided for 34/hours/week content, which was revised to 30 hours in Sep’16 which has now been deferred to Q2FY18. Changes in senior management in Zee TV (new channel head has been appointed) is now behind us. New shows and story line-up for the upcoming content has been finalized. New launches and increase in programming hours will be closely watched in the ensuing quarters. After reduction in programming hours from Q3FY16, the company has been focusing on replacing other non-performing shows. As the below exhibits indicates that 69% of the current content of Zee TV has been launched in FY17. Zee TV is at lowest in terms of fresh programing hours on weekly basis (24.5hrs) as compared to the competitors (Star Plus- 40hrs, Colors- 29.5hrs and Sony at 22.5hrs). Zee TV is launching its flagship non-fiction show Sa-R-Ga-Ma-Pa-lil-champs from 25th Feb’17, which is replacement of . Increase in number of hours is the key in near future and success of the same would be driver of advertisement revenue growth. Increase in programming hours are also crucial to push absolute viewership, which in-turn result into higher implied market share. Zee TV absolute viewership has reduced to 410mn (-30%) in week 6 as compared to week 20 of 2016. This is partially attributable to lesser number of programming hours.

Exhibit 2: Fresh programming/week Exhibit 3: Programing hours/week trend as stated in the quarterly earnings call 40.0 100% 34.0 50 100% 35.0 40 80% 69% 68% 30.0 69% 60% 58% 26.0 25.0 25.0 30 60% 24.0 25.0 22.0 39% 21.0 21.0 21.0 20 40% 20.0 20.0 10 20% 15.0 0 0% 10.0 Zee TV Zindagi &TV Sony Colors Ok Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Plus Programming hours Zee TV &TV Luanched in 2016 Source: Emkay Research Source: Company, Emkay Research

It has increased programing hours on &TV over the last 3 months to 24/week vs 21/week from last couple of quarters. &TV launched 3 new shows with one of them is flagship non-fiction show – Voice of India and other 2 are fiction shows.

Exhibit 4: Zee TV weekly fresh content Exhibit 5: &TV weekly fresh content Zee TV Launched date Timing Hours/week &TV Launched date Timing Hours/week Ajee Sunte Ho Nov-16 Mon-Fri 6:00 PM 2.5 Happy Hours Aug-16 Mon-Fri 7.00 PM 2.5 Bin Kuch Kahe Feb-17 Mon-Fri 6:30 PM 2.5 Ek Vivah Aisa Bhi Feb-17 Mon-Fri 7.30 PM 2.5 Kaala Teeka Nov-15 Mon-Fri 7:00 PM 2.5 Queens Hain Hum Nov-16 Mon-Fri 8:00 PM 2.5 Sanyukt Sep-16 Mon-Fri 7.30 PM 2.5 Ganga Mar-15 Mon-Fri 8:30 PM 2.5 Zindagi Ki Mehek Sep-16 Mon-Fri 8:00 PM 2.5 Santoshi Maa Nov-15 Mon-Fri 9:00 PM 2.5 Jamai Raja Aug-14 Mon-Fri 8:30 PM 2.5 Badho Bahu Sep-16 Mon-Fri 9:30 PM 2.5 Apr-14 Mon-Fri 9:00 PM 2.5 Waaris May-16 Mon-Fri 10:00 PM 2.5 Jul-15 Mon-Fri 9:30 PM 2.5 Bhabhi ji Ghar par hain Mar-15 Mon-Fri 10:30 PM 2.5 Wo apna Sa Jan-17 Mon-Fri 10:00 PM 2.5 The Voice India Dec-16 Sat-Sun 9.00 PM 2.0 Hoshiyar Brahmarakshas Aug-16 Sat-Sun 9.00 PM 2.0 Dec-16 Sat-Sun 10.00 PM 2.0 Sahi Waqt, Sahi Kadam! Total 24.5 Total 24.0

Source: Emkay Research Source: Emkay Research

Emkay Research | February 20, 2017 3

Zee Entertainment (Z IN) India Equity Research | Company Update

Exhibit 6: Star Plus weekly fresh content Exhibit 7: Colors weekly fresh content Hours/ Star Plus Launched date Timing Hours/week Colors Launched date Timing Suhaani si ek ladki Jun-14 Mon-Sun 5:00 PM 3.5 week Jaana Na Dilse Door May-16 Mon-Sun 5:30 PM 3.5 Thapki Pyar Ki May-15 Mon-Sun 6:30 PM 3.5 Devanshi Oct-16 Mon-Sun 7:00 PM 3.5 Mere Angne Mein Jun-15 Mon-Sun 6:00 PM 3.5 Meri Durga Jan-17 Mon-Sun 6:30 PM 3.5 Sasural Simar Ka Apr-11 Mon-Sun 7:30 PM 3.5 Shakti May-16 Mon-Fri 8:00 PM 2.5 Saath Nibhaana Saathiya May-10 Mon-Sun 7:00 PM 3.5 Naagin-2 Oct-16 Sat-Sun 8.00 PM 2.0 Ye Hai Mohabbatein Dec-13 Mon-Sun 7:30 PM 3.5 Udaan Aug-14 Mon-Sat 8:30 PM 2.5 Pardes Mein Hai Mera Dil Nov-16 Mon-Fri 8:00 PM 2.5 Shani Nov-16 Mon-Fri 9:00 PM 2.5 Chandra Nandni Oct-16 Mon-Fri 8:30 PM 2.5 Ek Shringaar- Dec-16 Mon-Fri 9:30 PM 2.5 Naamkarann Sep-16 Mon-Sat 9:00 PM 3.0 Swabhiman Yeh Rishta Kya Kehlata Hai Jan-09 Mon-Sat 9:30 PM 3.0 Mar-16 Mon-Fri 10:00 PM 2.5 Ishqbaaaz Jun-16 Mon-Sat 10:00 PM 3.0 Dil Se Dil Tak Jan-17 Mon-Fri 10:30 PM 2.5 Dil Boley Oberoi Feb-17 Mon-Sat 10.30 PM 3.0 Rising Stars Feb-17 Sat-Sun 9 PM 2.0 Dil Hai Hindustani Jan-17 Sat-Sun 8.00 PM 2.0 Total 29.5 Total 40.0 Source: Emkay Research Source: Emkay Research

Exhibit 8: Sony Television weekly fresh content Exhibit 9: Life of weekly fresh content Launched Launched Hours/ Sony TV Timing Hours/week Life OK Timing date date week Peshwa Baajirao Jan-16 Mon-Fri 7:30 pm 2.50 Har Mard Ka Dard Feb-17 Mon-Fri 8.00 PM 2.5 Sankat mochan hanuman May-15 Mon-Fri 8:00 pm 2.50 Kalash - Ek Vishwaas Mar-15 Mon-Fri 8.30 PM 2.5 Ek Rishta Sajhedari Ka Aug-16 Mon-Fri 8:30 pm 2.50 Ghulaam Jan-17 Mon-Fri 9.00 PM 2.5 May I Come In Beyhadh Oct-16 Mon-Fri 9:00 pm 2.50 Mar-16 Mon-Fri 9.30 PM 2.5 Kuch Rang Pyar Madam? Feb-16 Mon-Fri 9:30 pm 2.50 – Ke Aise Bhi Jul-12 Mon-Sun 10.00 PM 7.0 Apr-16 Sat-Sun 9:00 PM 3.50 India Fights Back SuperCops vs Sat-Sun-11.30 PM, Jan-12 Sat-Sun 9.00 PM 2.0 Crime Patrol May-03 3.00 Supervillains Fri-10.00 & 11.00 PM Total 19.0 Dec-16 Sat-Sun 8:00 PM 2.00 Source: Emkay Research Sat-11.00 PM, CID Jan-98 1.50 Sun 10:30 PM Total 22.5 Source: Emkay Research

Competition remain intense in Hindi GEC space Over the last 12 months all the Hindi GEC players have aggressive replaced content to sustain or improve viewership share. Sony and Colors have replaced/launched 60% and 68% of shows in FY17, marginally lower than Zee TV. Success of shows for both Colors and Sony has been commendable, which is visible in viewership market share gain. Nevertheless, Zee has been aggressive in content strategy from FY13-16 and it has delivered better than industry advertisement revenue growth over the same period despite less programing hours. Zee has not been chasing hours while the focus has been on RoI’s. We believe, the same strategy would continue going forward.

Viewership share trend in Hindi GEC space over the past 38 weeks As highlighted above that most of the channels saw substantial content replacement in FY17 while some have succeed in gaining viewership share while others struggled. . Urban+Rural viewership (comparison for 38 weeks- Week20’16-Week6’2017) based on top 10 channels: Zee TV has lost ~410bps viewership share majorly to Sony Entertainment (+428bps). In Free-to-Air (FTA) genre, Zee Anmol, Star Utsav, has lost out to Colors Rishtey (see exhibit below). Two hit programs i.e. Naagin- Season 2 and Naagin has been driving viewership for Color and Rishtey . Urban viewership: Zee TV has lost 300bps over 38 weeks to 10.4%, gainer are Sony Entertainment (+301bps) and Colors (+91bps) among the pay channels. Rishtey has gained substantially from the loss of Zee Anmol. . Rural viewership: Zee TV has lost ~259bps in viewership share to 8% and loss for Zee Anmol stand at 47bps to 13.7%. Sony Pal and Sony Sab also lost 295bps and 432bps, respectively. While the gainer is Colors Rishtey (~520bps). In paid Channels Zee TV has lost 259bps while Sony has gained 582bps. . &TV, which is parallel Hindi GEC channel of Zee Ent, has 69% of content that has been launched in FY17. The problem here is that market share has been stagnant from last 15 months. The company has been stating to increase the programming hours from 21-22/week

Emkay Research | February 20, 2017 4

Zee Entertainment (Z IN) India Equity Research | Company Update

to 24-25hrs but the same has just started to happen. We would attribute the same focus on RoI as market share improvement has not happened despite content changes. . On the other hand, Sony’s aggressive focus on improving content quality and increase the channel reach has started to show results with improved viewership share. Viewership share of Sony Ent. has shot up to 9% vs 5% (from week 20’2016 to week 7’2017), the same has sustained over the last 24 weeks. In urban markets, the share has improved from 9% to 12% while improvement has been in rural markets as well. Sony’s success is primarily driven by the weekend comedy show.

Exhibit 10: Urban+Rural Viewership Exhibit 11: Urban+Rural Viewership share week week week week week Week % week week week week week week Changes Channels Channels 20 29 39 49 1 6 Growth 20 29 39 49 1 6 (bps) STAR Plus 647 696 690 653 698 609 -6% STAR Plus 15% 15% 15% 14% 16% 14% -101 Colors 636 585 545 649 687 626 -2% Colors 15% 13% 12% 14% 15% 14% -36 Zee TV 583 637 523 452 423 410 -30% Zee TV 14% 14% 11% 10% 9% 9% -409 Zee Anmol 451 434 439 380 347 377 -17% Zee Anmol 10% 9% 10% 8% 8% 9% -180 STAR Utsav 459 450 458 334 338 405 -12% STAR Utsav 11% 10% 10% 7% 8% 9% -134 Life Ok 444 438 430 395 351 373 -16% Life Ok 10% 9% 9% 9% 8% 9% -172 Sony Pal 496 414 411 429 372 368 -26% Sony Pal 12% 9% 9% 9% 8% 8% -305 Sony TV 217 359 425 432 419 404 87% Sony TV 5% 8% 9% 10% 9% 9% 428 Sony Sab 372 359 372 370 366 332 -11% Sony Sab 9% 8% 8% 8% 8% 8% -99 Rishtey 290 325 424 498 438 NA Rishtey 6% 7% 9% 11% 10% NA Total 4,306 4,661 4,618 4,517 4,500 4,342 1% Total 100% 100% 100% 100% 100% 100%

Source: BARC, Emkay Research Source: BARC, Emkay Research

Exhibit 12: Urban Viewership Exhibit 13: Urban Viewership share week week week week week Week % week week week week week week Growth Channels Channels 20 29 39 49 1 6 Growth 20 29 39 49 1 6 (bps) STAR Plus 432 478 456 438 490 427 -1% STAR Plus 18% 19% 19% 18% 20% 18% 16 Colors 414 415 371 436 470 427 3% Colors 18% 17% 15% 18% 19% 18% 91 Zee TV 316 356 301 264 255 240 -24% Zee TV 13% 14% 12% 11% 10% 10% -301 Life Ok 284 287 265 252 229 240 -15% Life Ok 12% 12% 11% 10% 9% 10% -165 SONY SAB 264 266 264 271 266 244 -8% SONY SAB 11% 11% 11% 11% 11% 11% -65 Sony TV 217 259 299 308 291 282 30% Sony TV 9% 10% 12% 13% 12% 12% 301 &TV 127 114 133 136 160 132 4% &TV 5% 5% 6% 6% 6% 6% 30 Sony Pal 114 100 106 108 109 108 -5% Sony Pal 5% 4% 4% 4% 4% 5% -15 Zee Anmol 99 104 100 91 NA Zee Anmol 4% 4% 4% 4% -419 STAR Utsav 95 101 111 84 106 12% STAR Utsav 4% 4% 5% 0% 3% 5% 56 Rishtey 98 122 109 NA Rishtey 0% 0% 0% 4% 5% 5% 471 Total 2,361 2,481 2,406 2,401 2,476 2,316 -2% Total 100% 100% 100% 100% 100% 100%

Source: BARC, Emkay Research Source: BARC, Emkay Research

Exhibit 14: Rural Viewership Exhibit 15: Rural Viewership share week week week week week Week % week week week week week week Growth Channels Channels 20 29 39 49 1 6 Growth 20 29 39 49 1 6 (bps) Zee Anmol 352 330 339 288 267 287 -19% Zee Anmol 14% 15% 15% 13% 12.5% 13.7% -47 Sony Pal 383 314 304 321 263 260 -32% Sony Pal 15% 14% 13% 15% 12.3% 12.4% -295 STAR Utsav 365 349 347 254 254 299 -18% STAR Utsav 15% 16% 15% 12% 11.9% 14.3% -37 Rishtey 261 205 240 327 376 329 26% Rishtey 10% 9% 11% 15% 18% 16% 520 STAR Plus 215 218 234 215 208 182 -16% STAR Plus 9% 10% 10% 10% 10% 9% 3 Colors 222 170 174 212 217 198 -11% Colors 9% 8% 8% 10% 10% 9% 56 Zee TV 267 280 222 188 168 171 -36% Zee TV 11% 13% 10% 9% 8% 8% -259 158 102 129 132 116 -26% Big Magic 6% 5% 0% 6% 6% 6% -80 Life Ok 160 150 165 143 121 133 -17% Life Ok 6% 7% 7% 7% 6% 6% -10 SONY SAB 108 108 SONY SAB 4% 0% 5% 0% 0% 0% NA Sony TV 0 101 126 124 127 122 NA Sony TV 0% 5% 6% 6% 6% 6% 582 Total 2,491 2,219 2,259 2,201 2,134 2,095 -16% Total 100% 100% 100% 100% 100% 100% 0 Source: BARC, Emkay Research Source: BARC, Emkay Research

Regional channel viewership share remain on strong footing Zee has been seeing strong traction in viewership market share across the regional channels. We believe that monetization of the same would continue in FY18 and beyond, to deliver better than industry advertisement revenue growth.

Emkay Research | February 20, 2017 5

Zee Entertainment (Z IN) India Equity Research | Company Update

Exhibit 16: Marathi viewership share – monthly trend Channel Oct’15 Nov’15 Dec’15 Jan’16 Feb’16 Mar’16 Apr’16 May’16 Jun’16 Jul’16 Aug’16 Sep’16 Oct’16 Nov’16 Dec’16 Jan’17 39% 40% 43% 42% 36% 38% 39% 38% 37% 40% 43% 44% 51% 47% 48% 51% Colors Marathi 22% 20% 22% 22% 25% 26% 26% 27% 27% 24% 21% 19% 18% 18% 20% 17% 19% 19% 18% 18% 19% 18% 18% 16% 16% 17% 17% 17% 14% 15% 14% 15% Fakt Marathi 10% 9% 8% 7% 9% 9% 10% 7% 8% STAR Pravah 11% 13% 11% 12% 12% 9% 8% 9% 9% 9% 10% 10% 9% 10% 10% 10% Source: BARC, Emkay Research Exhibit 17: Kannada viewership share – monthly trend Channel Oct’15 Nov’15 Dec’15 Jan’16 Feb’16 Mar’16 Apr’16 May’16 Jun’16 Jul’16 Aug’16 Sep’16 Oct’16 Nov’16 Dec’16 Jan’17 Colors Kannada 30% 34% 35% 33% 29% 29% 29% 28% 30% 30% 31% 33% 31% 32% 31% 33% Udaya TV 19% 16% 16% 17% 16% 15% 16% 16% 17% 17% 16% 16% 12% 11% 10% 11% Suvarna 18% 16% 17% 16% 19% 21% 19% 17% 15% 15% 18% 17% 20% 20% 20% 19% Udaya Movies 19% 19% 17% 17% 17% 17% 18% 19% 19% 18% 15% 16% 16% 15% 16% 15% 14% 16% 16% 16% 18% 18% 18% 20% 19% 19% 20% 18% 21% 21% 23% 22% Source: BARC, Emkay Research

Exhibit 18: Telugu viewership share – monthly trend Channel Oct’15 Nov’15 Dec’15 Jan’16 Feb’16 Mar’16 Apr’16 May’16 Jun’16 Jul’16 Aug’16 Sep’16 Oct’16 Nov’16 Dec’16 Jan’17 ETV Telugu 25% 26% 26% 25% 26% 24% 23% 23% 23% 23% 23% 22% 23% 23% 22% 23% Star Maa 24% 21% 23% 22% 22% 22% 22% 22% 22% 20% 20% 20% 20% 21% 21% 21% 19% 22% 21% 23% 24% 24% 25% 26% 24% 23% 21% 22% 22% 20% 21% 22% Gemini TV 19% 20% 18% 19% 17% 18% 20% 19% 20% 24% 25% 27% 27% 28% 28% 26% Gemini Movies 12% 12% 12% 11% 11% 11% 10% 10% 11% 11% 10% 9% 9% 9% 9% 8% Source: BARC, Emkay Research

Exhibit 19: Tamil viewership share – monthly trend Channel Oct’15 Nov’15 Dec’15 Jan’16 Feb’16 Mar’16 Apr’16 May’16 Jun’16 Jul’16 Aug’16 Sep’16 Oct’16 Nov’16 Dec’16 Jan’17 Sun TV 60% 59% 58% 60% 62% 61% 61% 58% 57% 57% 57% 56% 59% 58% 57% 58% KTV 19% 20% 18% 17% 17% 16% 17% 19% 18% 16% 15% 15% 14% 15% 14% 13% STAR Vijay 11% 10% 13% 12% 12% 11% 10% 11% 12% 13% 12% 12% 10% 10% 10% 11% 5% 5% 7% 7% 7% 9% 10% 12% 12% 13% 13% 13% 13% Polimer 6% 6% 6% 6% 5% 5% 5% 5% 5% 4% 5% 4% 5% 4% 4% Source: BARC, Emkay Research

Exhibit 20: Oriya viewership share – monthly trend Channel Oct’15 Nov’15 Dec’15 Jan’16 Feb’16 Mar’16 Apr’16 May’16 Jun’16 Jul’16 Aug’16 Sep’16 Oct’16 Nov’16 Dec’16 Jan’17 Sarthak TV 46% 46% 50% 50% 49% 55% 51% 50% 50% 51% 50% 51% 53% 52% 54% 51% Tarang TV 29% 30% 29% 29% 28% 26% 28% 31% 32% 31% 30% 29% 26% 25% 25% 28% Colors Oriya 9% 10% 8% 10% 11% 8% 8% 8% 5% 5% 5% 6% 7% 8% 7% 7% Odisha TV 9% 8% 8% 7% 9% 7% 7% 7% 7% 9% 10% 10% 9% 11% 10% 10% Alankar 6% 5% 5% 4% 5% 4% 5% 5% 5% 4% 4% 4% Source: BARC, Emkay Research

Exhibit 21: Bangla viewership share – monthly trend Channel Oct’15 Nov’15 Dec’15 Jan’16 Feb’16 Mar’16 Apr’16 May’16 Jun’16 Jul’16 Aug’16 Sep’16 Oct’16 Nov’16 Dec’16 Jan’17 STAR Jalsha 47% 46% 46% 46% 46% 45% 43% 41% 43% 41% 44% 48% 45% 47% 48% 50% 29% 27% 29% 30% 28% 29% 30% 30% 31% 34% 32% 29% 29% 29% 29% 30% Jalsha Movies 12% 14% 14% 12% 13% 12% 12% 14% 12% 13% 11% 10% 12% 11% 12% 9% Colors Bangla 6% 6% 6% 6% 6% 6% 7% 6% 6% 6% 6% 7% 7% 8% 7% 6% 6% 6% 6% 6% 5% Aakaash Aath 7% 6% 7% 8% 7% 6% 6% Source: BARC, Emkay Research

Exhibit 22: Bhojpuri viewership share – monthly trend Channel Oct’15 Nov’15 Dec’15 Jan’16 Feb’16 Mar’16 Apr’16 May’16 Jun’16 Jul’16 Aug’16 Sep’16 Oct’16 Nov’16 Dec’16 Jan’17 17% 22% 28% 29% 34% 43% 41% 45% 38% 37% 34% 33% 36% 34% 39% 40% Bhojpuri Cinema 38% 37% 34% 29% 25% 29% 27% 31% 34% 33% 25% 29% 33% 27% 25% Dabangg 33% 14% 15% 17% 16% 14% 13% 13% 16% 12% 17% 23% 20% 15% 17% 18% Dangal TV 35% 17% 15% 13% 14% 13% 11% 11% 11% 13% 12% 14% 10% 14% 13% 14% ETV Bihar Jharkhand 14% 9% 5% 6% 7% 6% 5% 4% 3% 4% 4% 6% 4% 4% 4% 3% Source: BARC, Emkay Research. We have not incorporated financials from RBNL acquisition in our estimates.

Emkay Research | February 20, 2017 6

Zee Entertainment (Z IN) India Equity Research | Company Update

Movie production business has performed well in the past The company re-entered in Bollywood movie production business in 2013-14 after a halt of few years. In the new avatar, approach has been conservative with co-production model to de-risk the investments. Initial focus was only on Marathi movie production, success from the same has led to expansion in Bollywood production. During FY17, the company has increased investment guidance in movie production business to Rs1-1.5bn annually, with focus on Marathi, Kannada and Punjabi movies. It will be mainly producing mid-budget movies and 1-2 big budget movies. Exhibit below clearly highlight the success of Marathi movie production over the last 9 years.

Exhibit 23: Key regional movies produced over the last 10 years Box office Name of Box office Year Name of the Movie Language Year Language collection (Rsmn) the Movie collection (Rsmn) 2008 De Dhakka Marathi 60 2014 My Father Godfather Hindi 2010 Natrang Marathi 120 2015 Timepass 2 Marathi 432 2014 Timepass Marathi 330 2015 Hindi 250 2014 Marathi 400 2015 Katyar Kaljat Ghusali Marathi 400 2014 Fandry Marathi 70 2016 Sairat Marathi 862 Dr Prakash Baba Amte: 2014 Marathi 120 2016 Rustom Hindi 1274 The Real Hero 2014 Force Bengali 2017 Ti Saddhya Kay Karte Marathi 225 2014 Elizabeth Ekadashi Marathi 70

Source: Emkay Research

Exhibit 24: Movie distribution rights acquired Box office Name of Box office Year Name of the Movie Language Year Language collection (Rsmn) the Movie collection (Rsmn) 2007 Saade Maade Teen Marathi 45 2015 Double Seat Marathi 200 2009 Ek Daav Dhobhipachhad Marathi 2016 Natsamrat Marathi 500 2011 Guldasta Marathi 2016 Bollywood Diaries Hindi 4 2011 Zhakaas Marathi 2016 Kanha Marathi 46 2012 Kaksparsh Marathi 140 2016 Jaundya Na Balasaheb Marathi 24 2015 Lokmanya Ek Yugpurush Marathi 130 2016 Ventilator Marathi 258 2015 Killa Marathi 100

Source: Company, Emkay Research Expansion in international markets continue to strengthen the bouquet Over the last few years, Zee has been expanding reach in international markets. Since FY13, it has launched 15 channels across 6 geographies. Focus continues to remain on further expanding reach and stretching brand presence. Global footprint will continue to expand, driven by focused strategy.

Exhibit 25: Expansion in new markets Year International Genre FY13 Arabic GEC FY14 Zee Nung Indonesia- movie FY14 Zee Bioskop Thailand – movie FY14 Zee Lamhe Europe-GEC FY15 Africa GEC FY15 Zee Hiburan Indonesia GEC FY15 Zee Cinema International Africa - movie FY15 &TV UK-GEC FY16 &TV Europe-GEC FY16 Zee Sine Philippines-movie FY16 French-GEC FY17 Zee.One German-movie FY17 Zee Bollymovies Africa-movie FY17 Zee Bollynova Africa-GEC FY17 Spanish-movie Source: Company, Emkay Research

Emkay Research | February 20, 2017 7

Zee Entertainment (Z IN) India Equity Research | Company Update

Exhibit 26: Initiatives in FY16 to expand international reach Region Key Initiatives APAC Expanded reach, Zee Bioskop/Zee Nung caters to 2/2.5mn homes in Indonesia/Thailand Middle east Signed deals with Geo, Cartoon Network Arabic and new DTH platforms USA OTT service, Zee Family reached a milestone of 75K registered users in 8 months USA Started event business USA Launched 3 channels on Digicel, one of the biggest FTH platforms in Caribbean USA Consolidated being no.1 distributed channel in Canada through launch on Jadoo TV Source: Company, Emkay Research

Exhibit 27: International business revenues Particulars Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 YoY % QoQ % YTD 17 YTD 16 YoY % Advertisement revenue 812 1120 705 792 817 0.6 3.2 2,314 1,547 49.6 Subscription revenue 1030 1262 1103 1158 1117 8.4 (3.5) 3,378 2,069 63.3 Other sales and services 932 210 598 672 596 (36.1) (11.3) 1,866 1,180 58.1 Total Revenue 2774 2592 2406 2622 2530 (8.8) (3.5) 7,558 4,796 57.6 Source: Company, Emkay Research

Advertisement revenues; continued outperformance to industry growth Advertisement revenue growth in FY18E would be driven by continued strong viewership share in almost all the regional channels, telecast of big ticket movies like Dangal, Raees and others on Hindi cinema and GEC channels and gradual improvement in viewership share of Zee TV (impact of the same would be visible form H2FY18). We are projecting advertisement revenue growth of 14%/15% for FY18/19E, which is healthy outperformance to industry estimate of 8% for CY17 by GroupM.

Exhibit 28: Advertisement growth to outperform industry growth Exhibit 29: Quarterly advertisement revenue trend

50000 48326 35% 11000 Rs mn 40% 29% 32% 41919 30% 29% 9000 30% 40000 24% 37257 24% 21% 34297 25% 23% 7000 17% 20% 20% 15% 16% 30000 19% 23801 26603 15%15% 7%

Rs mn Rs 5000 10% 12% 9% 3% 19639 10% 20000 13% 3000 0% 9% 5%

10000 0%

Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 FY13 FY14 FY15 FY16 FY17E FY18E FY19E Q1FY15 AdvertisementAxis Title revenue Ad Revenue (LHS)

Source: Company, Emkay Research Source: Company, Emkay Research Subscription revenue: Phase III and IV monetization yet to reflect The management has maintained its guidance of double digit growth over the medium term as benefits of Phase III and IV are yet to reflect in financials. In our view, benefits of Phase III and IV would be reflected over the next 12-18months. Management refrained from stating views/ implications of draft tariff order as matter is sub-judice. We continue to believe that if tariff order is implemented in the current form, it would be negative for the broadcasters.

Exhibit 30: Domestic subscription revenue trend Exhibit 31: International subscription Rs mn Rs mn 30000 30% 5000 4839 4782 20% 26% 25132 14% 4688 25000 21929 25% 4750 4586 4552 16302 18500 7% 10% 20000 4500 6% 4276 17% 20% 6% 15000 13184 13936 4250 2% 0% 11648 3% 13% 19% 15% 4001 10000 15% 4000 13% -10% 5000 10% 3750 6% -17% 0 5% 3500 -20% FY13 FY14 FY15 FY16 FY17E FY18E FY19E FY13 FY14 FY15 FY16 FY17E FY18E FY19E Domestic subscription International Subscription Axis Title Axis Title Source: Company, Emkay Research Source: Company, Emkay Research

Emkay Research | February 20, 2017 8

Zee Entertainment (Z IN) India Equity Research | Company Update

Our view on Trai’s draft tariff order

Key positives: . Distributors are allowed to charge for network from consumer apart from the content cost. . Distributors revenue is largely secured as they will charge fixed rental fee to consumer and additional 20% revenue share on the pay channel revenue from broadcaster . Substantial reduction in ala-carte pricing to benefit consumers . Increase business viability for smaller MSO’s and independent LCO’s . Non-discriminatory pricing of content across distributors would reduce litigations meaningfully

Key Negatives: . With introduction of rental charge, consumer ARPU has to move up meaningfully to safeguard and increase broadcaster revenues. Broadcasters would be able to offset the impact in Metros and large cities while the same will not happen in tier III and IV towns where ARPU are low and purchasing power would restrict meaningful increase. Benefits of Phase III and IV could go under limbo if consumer ARPU doesn’t increase to desired level. . Risk/volatility to subscription for broadcaster as majority of the content can shift to ala-carte pricing unlike committed revenues from MSO’s and DTH operators currently. . Content pricing is sole responsibility of broadcaster, any miscalculation could result in lower than expected desired number of subscribers. Slower push or higher pricing could result in lower than expected subscriber opting for channels. . Broadcaster will have to market its channels offering t consumer along with distributors, therefore increase in cost. LCO’s might not push the channels to get desired results. There could be joint marketing teams set up by broadcasters and distributors. . As distributor would continue to have say in packaging of channels or formatting of bouquets, this might lead to additional incentivisation to the distributor. . Implementation would be the key as LCO’s revenue are secured and now highest risk is on broadcaster’s revenue. Broadcasters will have to spend additional bucks to drive implementation. . To safeguard advertisement revenues from ancillary channels, broadcasters might have to make them FTA.

Emkay Research | February 20, 2017 9

Zee Entertainment (Z IN) India Equity Research | Company Update

Outlook and valuations

Loss of market share for Zee TV from last many weeks has been our key concern as it would restrict outperformance to industry advertisement growth. However, increased investment towards movie satellite rights is expected to drive advertisement revenue till Zee TV’s market share recovers. Higher movie revenues are also margin accretive for Zee due to its aggressive accounting policy for amortization. The management has guided for +30% EBITDA margin for FY18 while the company has consistently delivered +32% margin over the last 10 years in entertainment business (except FY15 & FY16 as higher cost was on account of &TV launch). We believe, the company can easily deliver +33% EBITDA margin in entertainment business going forward despite aggressive content investments. Meaningful slowdown in advertisement, subscription revenues and losses in movie production business are the key risk to our margin thesis. We have not incorporated Reliance broadcast acquisition in our estimates. Management has stated that EBITDA should break-even at the time of consolidation (Q3FY18E).

We upgrade the stock to ACCUMULATE with revised TP of Rs580 (roll forward valuation to FY19) as we believe, the company will be able to deliver heathy advertisement revenue growth despite gradual improvement in Zee TV’s viewership share. We are factoring aggressive content cost as it would increase programing hours on Zee TV and &TV over the next 12-15months. The company is expected to outlay digital strategy in Q3FY18E. Key risks to our call: longer than expected recovery post demonetization, sustained weakness in Zee TV’s viewership share and implementation of Trai’s draft tariff order in current form.

Exhibit 32: P/E band chart Exhibit 33: P/B band chart 600 600

500 500 32x 400 400 7x 24x 300 300 5x 16x 200 200 3x 8x 100 100 1x

0 0

Jul-12

Jul-12

Apr-06 Apr-08 Oct-09 Oct-11 Apr-13 Apr-15 Oct-16

Jun-07 Jan-09 Jun-09 Jun-14 Jan-16 Jun-16

Mar-10 Feb-07 Feb-12 Feb-14 Mar-17

Nov-07 Dec-10 Dec-12 Nov-14

Sep-06 Aug-08 Aug-10 Sep-13 Aug-15

Apr-06 Apr-08 Oct-09 Oct-11 Apr-13 Apr-15 Oct-16

Jun-07 Jan-09 Jun-09 Jun-14 Jan-16 Jun-16

May-11

Feb-07 Mar-10 Feb-12 Feb-14 Mar-17

Nov-07 Dec-10 Dec-12 Nov-14

Aug-08 Sep-06 Aug-10 Sep-13 Aug-15 May-11 Source: Company, Emkay Research Source: Company, Emkay Research

Exhibit 34: EV/EBITDA band chart 700 28x 600 500 21x 400 300 14x 200 7x 100

0

Jul-12

Apr-15 Apr-06 Apr-08 Oct-09 Oct-11 Apr-13 Oct-16

Jun-14 Jan-16 Jun-07 Jan-09 Jun-09 Jun-16

Feb-12 Feb-07 Mar-10 Feb-14 Mar-17

Aug-10 Dec-12 Sep-13 Sep-06 Nov-07 Aug-08 Dec-10 Nov-14 Aug-15 May-11 Source: Company, Emkay Research

Emkay Research | February 20, 2017 10

Zee Entertainment (Z IN) India Equity Research | Company Update

Exhibit 35: Pro-forma financials post sale of sport business Consolidated (Rsmn) FY 17E FY 18E FY19E Revenue Subscription 23051 26617 29914 Advertisement 37257 41919 48326 Others 4946 4800 4800 Total Revenue 65254 73337 83039 Expenditure 46304 51574 57078 EBITDA 18950 21763 25962 EBITDA margin 29% 30% 31% Other income 2250 2600 2970 Depreciation 1136 1327 1368 Interest 326 300 300 PBT 17,064 22,735 27,263 Tax 6844 7730 9269 Tax rate 40% 34% 34% PAT 10,074 14,980 17,965 EPS 10.5 15.6 18.7 EPS -Adj for RPS 9.0 14.4 17.9

Sports (Rs mn) FY 17E FY 18E FY19E Revenue 15% 17% Subscription 1004 1045 1183 Advertisement 4551 4738 5364 Others 1138 1184 1341 Total Revenue 6,693 6,967 7,889 Expenditure 6,713 7,667 8,589 EBITDA -20 -700 -700 EBITDA margin 0% -10% -9%

Ex sports (Rsmn) FY 17E FY 18E FY19E Revenue 9% 14% 16% Subscription 22047 25572 28730 Advertisement 32705 37182 42962 Others 3808 3616 3459 Total Revenue 58561 66370 75151 Expenditure 39590 43907 48489 EBITDA 18970 22463 26662 EBITDA margin 32% 34% 35% Other income 2,250 2,600 2,970 Depreciation 1,136 1,327 1,368 Interest 326 300 300 PBT 17,084 23,435 27,963 Tax 5,809 7,968 9,507 Tax rate 34.0% 34.0% 34.0% PAT 11,276 15,467 18,456 PAT 11,129 15,442 18,427 EPS 11.59 16.08 19.19 EPS -Adj for RPS 10.11 14.92 18.34 Source: Company, Emkay Research

Emkay Research | February 20, 2017 11

Zee Entertainment (Z IN) India Equity Research | Company Update

Key Financials (Consolidated) Income Statement Y/E Mar (Rs mn) FY15 FY16 FY17E FY18E FY19E Revenue 48,837 58,515 65,254 73,337 83,039 Expenditure 36,299 43,420 46,304 51,574 57,078 EBITDA 12,538 15,095 18,950 21,763 25,962 Depreciation 673 841 1,136 1,327 1,368 EBIT 11,865 14,254 17,815 20,435 24,593 Other Income 2,278 2,016 2,250 2,600 2,970 Interest expenses 103 123 326 300 300 PBT 14,040 16,147 19,739 22,735 27,263 Tax 4,285 5,536 6,844 7,730 9,269 Extraordinary Items 0 (331) (2,642) 0 0 Minority Int./Income from Assoc. (37) (4) (148) (48) (56) Reported Net Income 8,564 9,010 8,687 13,869 17,147 Adjusted PAT 9,775 10,551 12,749 14,980 17,965

Balance Sheet Y/E Mar (Rs mn) FY15 FY16 FY17E FY18E FY19E Equity share capital 21,152 21,130 960 960 960 Reserves & surplus 34,346 41,139 44,135 55,475 70,094 Net worth 55,499 62,269 45,095 56,436 71,054 Minority Interest 4 85 33 33 33 Loan Funds 12 9 20,179 15,979 11,779 Net deferred tax liability (531) (531) (531) (531) (531) Total Liabilities 54,984 61,832 64,776 71,917 82,336 Net block 11,376 13,856 14,096 13,769 13,400 Investment 9,755 10,439 10,939 15,939 20,939 Current Assets 47,519 52,639 56,084 60,285 69,348 Cash & bank balance 7,365 9,386 8,630 7,892 11,524 Other Current Assets 1,707 2,126 2,366 2,659 3,010 Current liabilities & Provision 14,544 15,979 17,221 18,954 22,229 Net current assets 32,975 36,660 38,863 41,331 47,118 Misc. exp 0 0 0 0 0 Total Assets 54,984 61,832 64,776 71,917 82,336

Cash Flow Y/E Mar (Rs mn) FY15 FY16 FY17E FY18E FY19E PBT (Ex-Other income) (NI+Dep) 11,762 14,131 17,489 20,135 24,293 Other Non-Cash items 0 0 0 0 0 Chg in working cap (4,350) (1,664) (2,959) (3,206) (2,155) Operating Cashflow 6,274 9,479 8,233 13,101 17,178 Capital expenditure (1,197) (3,321) (1,376) (1,000) (1,000) Free Cash Flow 5,077 6,158 6,857 12,101 16,178 Investments (1,465) (684) (500) (5,000) (5,000) Other Investing Cash Flow 0 0 0 0 0 Investing Cashflow (384) (1,989) 374 (3,400) (3,030) Equity Capital Raised 22 (22) (20,170) 0 0 Loans Taken / (Repaid) (5) (3) 20,170 (4,200) (4,200) Dividend paid (incl tax) (3,812) (3,805) (3,949) (3,639) (3,346) Other Financing Cash Flow 5,373 5,849 4,298 6,330 5,222 Financing Cashflow 1,475 1,896 23 (1,809) (2,624) Net chg in cash 7,365 9,386 8,630 7,892 11,524 Opening cash position 5,645 7,365 9,386 8,630 7,892 Closing cash position 7,365 9,386 8,630 7,892 11,524

Emkay Research | February 20, 2017 12

Zee Entertainment (Z IN) India Equity Research | Company Update

Key Ratios Profitability (%) FY15 FY16 FY17E FY18E FY19E EBITDA Margin 25.7 25.8 29.0 29.7 31.3 EBIT Margin 24.3 24.4 27.3 27.9 29.6 Effective Tax Rate 30.5 34.3 34.7 34.0 34.0 Net Margin 20.0 18.1 19.8 20.5 21.7 ROCE 27.7 27.9 31.7 33.7 35.7 ROE 16.6 15.9 21.1 27.3 26.9 RoIC 34.3 36.5 41.7 44.6 51.1

Per Share Data (Rs) FY15 FY16 FY17E FY18E FY19E EPS 8.9 9.7 11.8 14.4 17.9 CEPS 9.6 10.6 13.0 15.8 19.3 BVPS 57.8 64.8 47.0 58.8 74.0 DPS 3.5 3.5 3.7 3.4 3.1

Valuations (x) FY15 FY16 FY17E FY18E FY19E PER 59.3 54.4 44.8 36.6 29.6 P/CEPS 55.0 49.9 40.7 33.4 27.4 P/BV 9.1 8.2 11.3 9.0 7.1 EV / Sales 10.0 8.3 7.8 6.8 5.9 EV / EBITDA 39.1 32.3 26.8 23.0 18.8 Dividend Yield (%) 0.7 0.7 0.7 0.6 0.6

Gearing Ratio (x) FY15 FY16 FY17E FY18E FY19E Net Debt/ Equity (0.3) (0.3) 0.0 (0.1) (0.3) Net Debt/EBIDTA (1.4) (1.3) 0.0 (0.4) (0.8) Working Cap Cycle (days) 191.4 170.1 169.1 166.4 156.5

Growth (%) FY15 FY16 FY17E FY18E FY19E Revenue 10.4 19.8 11.5 12.4 13.2 EBITDA 4.1 20.4 25.5 14.8 19.3 EBIT 2.8 20.1 25.0 14.7 20.3 PAT (3.1) 5.2 (3.6) 59.7 23.6

Quarterly (Rs mn) Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Revenue 15,854 15,316 15,716 16,954 16,391 EBITDA 4,295 4,136 4,532 4,892 5,158 EBITDA Margin (%) 27.1 27.0 28.8 28.9 31.5 PAT 2,671 2,606 2,203 2,384 2,508 EPS (Rs) 2.8 2.7 2.3 2.5 2.6

Shareholding Pattern (%) Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Promoters 43.1 43.1 43.1 43.1 43.1 FIIs 47.6 47.1 48.1 48.0 46.6 DIIs 4.2 4.1 3.8 3.5 4.3 Public and Others 5.1 5.7 5.0 5.4 6.0

Emkay Research | February 20, 2017 13

Zee Entertainment (Z IN) India Equity Research | Company Update

Emkay Rating Distribution BUY Expected total return (%) (Stock price appreciation and dividend yield) of over 25% within the next 12-18 months. ACCUMULATE Expected total return (%) (Stock price appreciation and dividend yield) of over 10% within the next 12-18 months. HOLD Expected total return (%) (Stock price appreciation and dividend yield) of upto 10% within the next 12-18 months. REDUCE Expected total return (%) (Stock price depreciation) of upto (-) 10% within the next 12-18 months. SELL The stock is believed to underperform the broad market indices or its related universe within the next 12-18 months.

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Emkay Research | February 20, 2017 www.emkayglobal.com 15