Fall in Zee Entertainment stock offers good buying opportunity, says LKP Securities

“I think that OTT (over the top) platform is definitely going to create some upheaval in the media industry but it will take some time not immediately that every user in the country is shifting to OTT because there are a lot of users in the rural markets and they are not yet aware of what is OTT exactly. In the urban market, the young generation is shifting gradually and players such as Netflix, Amazon and Hotstar are gaining quite good out of that,” Patil said.

“Zee has recently entered in to ZEE5 and they have also announced that they will be coming up with around 100-150 new content which will be including films and serials etc. so that is going to definitely help them in the near-term to medium-term but whenever you enter into new business, it takes some time to breakeven and the cost that you incur are definitely more than what you are earning at the initial stage. I think that it will take some time maybe about two-three years at least to breakeven. But once it breaks even, there will be a huge diaspora open for Zee to gain great revenues out of it. The OTTs till then will be spreading out in India maybe rural markets will take some time but at least in the urban and the semi-urban cities, it will be the must thing at that time,” he added.

“We think that it is a great opportunity and on the other hand, the FMCG companies are spending to a great extent and that is benefiting the ad revenues for Zee. Also market share in various geographies, Zee has become number one in most of the geographies,” said Patil.