In a research note dated March 7, Salmon Smith Barney (SSB) has forecast Zee to post a 45 per cent compounded annual earnings growth over the financial year ended March 31, 2000 to 2002/03. SSB said it has initiated coverage of India's largest private television network Zee Telefilms with a buy rating and set a price target of Rs 273.
That is more than double Zee's present price. The shares have lost over 90 per cent from their year-ago highs, but were up 7.98 per cent at Rs 123.70 on the Bombay Stock Exchange on Wednesday morning, while the benchmark index was up 0.56 per cent. It said Zee's thrust on moving to a pay-TV regime would help earnings.
Though many of Zee's channels are already pay-channels, its flagship Zee TV which garners most of its advertising revenue is still free-to-air and Zee plans converting it into a pay-channel in the current financial year.
Besides its broadcasting operations, Zee also runs a cable network and an Internet service business. SSB said Zee's integrated media business was ready to exploit the growing Indian media spending.
It said without elaborating that there were signs Zee's broadcasting fundamentals were bottoming out and its multiple system operator strategy had improved. Most analysts have said Zee's earnings will improve if it is able to increase its pay-revenue collection from cable operators.