Zee Entertainment Enterprises Limited — Q2 FY26 earnings call

Call held 16 Oct 2025

Management summary

Zee Entertainment reported a mixed Q2 FY26, marked by strong digital growth and strategic content investments, but continued softness in advertising revenue. ZEE5 achieved record quarterly revenue and significantly reduced its EBITDA loss, demonstrating progress towards profitability. However, overall EBITDA margins remained compressed at 7.4% due to increased operating costs. Management expressed cautious optimism for a recovery in advertising and overall profitability in the second half of FY26, while acknowledging that prior growth and margin aspirations are now challenging.

Highlights

  • ZEE5 revenues increased by 32% Year-on-Year in Q2 FY26.

  • ZEE5 achieved its highest-ever quarterly revenue, crossing INR 3,000 million (INR 300 crores).

  • ZEE5 EBITDA loss reduced by over 80% to INR 312 million (INR 31.2 crores) in Q2 FY26.

  • Advertisement revenues were 11% lower Year-on-Year but 6% up Quarter-on-Quarter.

  • Overall subscription revenue grew by 6%.

  • The company's network share increased by 100 basis points Quarter-on-Quarter to 17.8%.

  • EBITDA margins stood at 7.4%.

  • Profit after tax for the quarter was INR 765 million (INR 76.5 crores).

  • Cash and treasury investments as of September 2025 totaled INR 21.1 billion (INR 2,110 crores).

Key financials

  1. Profit After Tax ₹76.5 Cr
  2. EBITDA Margin 7.4%
  3. ZEE5 Quarterly Revenue ₹300 Cr +32%YoY
  4. Advertisement Revenue (YoY) — -11%YoY
  5. Advertisement Revenue (QoQ) — +6%QoQ
  6. Overall Subscription Revenue Growth — +6%YoY
  7. Cash & Treasury Investments ₹2,110 Cr

What they filed

Q1 FY27: revenue up 4.5%, net profit down 48.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,001 1,979 2,184 1,825 1,969 −2%2,280 +15%2,025 −7%1,907 +4%
EBITDA323 321 298 239 159 −51%256 −20%-255 −186%100 −58%
Net profit209 164 188 144 76 −64%155 −5%-104 −155%74 −49%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Profitability

  • ZEE5 Profitability Profitability · quarters to come · Low confidence profitability
    We remain committed to achieve profitability in this segment in the quarters to come on the back of these concerted steps.

    — Punit Goenka

  • Margins (FY26 H2) Profitability · H2 FY '26 · Medium confidence improving on a comparable basis
    Moving through in H2 FY '26, we expect the revenues to see an uptick, while profitability and cash generation continue to remain our priority. And we should see margins improving on a comparable basis, driven by the strategic initiatives being implemented.

    — Mukund Galgali

  • Exit Margin Aspiration Profitability · Low confidence not even be satisfied at 12%

    Previously 18% to 20% → not even be satisfied at 12%

    Our endeavour is to not even be satisfied at 12%, Sameer.

    — Punit Goenka

Ad Revenue Growth

  • Ad Revenue Growth (FY26 H2) Ad Revenue Growth · second half of FY '26 · Medium confidence uptick

    Previously 6% to 8% ad revenue growth → uptick

    But we are still hopeful for the second half, and we have always maintained that this year, the second half is going to be back ended in terms of the revenue growth as well as the profitability.

    — Vikas Somani

  • Ad Revenue Growth (FY26) Ad Revenue Growth · FY '26 · Medium confidence difficult to achieve 8% to 10%

    Previously 8% to 10% growth → difficult to achieve 8% to 10%

    Yes, the advertisement growth, which we were expecting in the beginning of the year and especially from the FMCG expectations are short of that and therefore achieving 8% to 10% growth, which we had given a guidance, looks a bit difficult speaking today.

    — Vikas Somani

Risks & concerns

  • Slow recovery in advertising spend and difficulty meeting prior growth targets.

    medium

    Ad revenues were 11% lower Y-o-Y, and management stated that achieving 8-10% ad revenue growth for FY26 looks difficult.

    Management acknowledged

  • Impact of increased operating costs on profitability and lower EBITDA margins.

    medium

    Overall operating cost increased by 9% Y-o-Y due to content and marketing investments, resulting in EBITDA margins of 7.4%.

    Management acknowledged

  • Previous high exit margin aspiration (18-20%) is now considered difficult to achieve.

    medium

    Management confirmed that the 18-20% exit margin aspiration 'does look difficult right now'.

    Analyst acknowledged

  • Strain on Zee Music business due to content moving behind paywalls by other platforms.

    low

    Most music platforms are now putting content behind paywalls, causing some strain on the music business, though it remains healthy.

    Management acknowledged

Areas of evasion (1)

  • specific numerical guidance for H2 FY26 ad revenue growth

Q&A highlights

2 direct
Revised outlook for ad revenues in H2 FY26 and FY27 growth aspirations, given 1H decline. Partial
We avoid giving a specific guidance right now because we are still waiting and watching how it pans out, but in terms of the sentiment, we are hopeful right now.

Management expressed caution and refrained from providing specific numerical guidance for future ad revenue growth, indicating uncertainty in a key revenue segment.

Asked by Kavish Parekh from B&K Securities

Margin trajectory and whether the previous 18-20% exit margin aspiration is aggressive given current costs. Direct
So, Kavish, that is right. Coming to your comment on the margin aspirations, which does look difficult right now.

Management directly acknowledged that a previously stated high margin target (18-20%) is now difficult to achieve, signaling a downward revision in profitability expectations.

Asked by Kavish Parekh from B&K Securities

Promoter stake increase and its potential to boost shareholder confidence amidst falling stock price. Direct
So, Arun, we are very, very keen to increase our stake in the organization in whichever structured manner that we can find best possible. And of course, as you said, if it is a structured transaction, it will have to be approved by the shareholders. Without that, we cannot go ahead.

This addresses a critical investor concern regarding promoter commitment and potential actions to enhance shareholder value and confidence, especially given recent stock performance.

Asked by Arun Malhotra from CapGrow Capital Advisors

2 min read 6 chapters

Detailed narrative

Q2 FY26 Performance Overview

Zee Entertainment reported a mixed Q2 FY26, with profit after tax at INR 76.5 crores and EBITDA margins at 7.4%. Overall operating costs increased by 9% Year-on-Year, reflecting strategic investments in content and new launches. While advertising revenues were down 11% Year-on-Year, they showed a 6% Quarter-on-Quarter uptick, with management expressing cautious optimism for H2 FY26.

Digital Business (ZEE5) Momentum

ZEE5 demonstrated strong growth, with revenues increasing by 32% Year-on-Year and achieving its highest-ever quarterly revenue, crossing INR 300 crores. The platform significantly reduced its EBITDA loss by over 80% to INR 31.2 crores, aligning with the objective to achieve breakeven. This improvement is attributed to tailored subscription plans in seven languages and an enhanced content offering.

Advertising Revenue Trends and Outlook

Advertising revenues experienced an 11% Year-on-Year decline but a 6% Quarter-on-Quarter increase, primarily driven by FMCG spending. Management noted that achieving the previously guided 8-10% ad revenue growth for FY26 now 'looks a bit difficult.' However, they anticipate a gradual recovery in H2 FY26, supported by the festive season, enhanced network share, and growth in the digital business.

Content Strategy and Costs

The company made deliberate investments in content, leading to a 9% Year-on-Year increase in overall operating costs. These investments included 39 linear and 26 digital content launches, as well as two new GEC channels in Kannada and Bangla markets. Management views these as long-term investments to fortify leadership and expects costs to stabilize in H2, yielding higher gains in advertising and subscription.

Balance Sheet and Liquidity

Zee Entertainment maintained a strong financial position, with cash and treasury investments totaling INR 2,110 crores as of September 2025. This includes INR 380 crores in cash, INR 690 crores in fixed deposits, and INR 1,050 crores in liquid mutual funds. Content inventory advances and deposits stood at INR 6,990 crores, a reduction of INR 60 crores since March 2025, reflecting optimized acquisition.

Promoter Stake and Shareholder Value

Addressing analyst concerns about the falling stock price and promoter stake, management expressed a strong desire to increase their stake in the organization. Punit Goenka stated, 'we are very, very keen to increase our stake... in whichever structured manner that we can find best possible,' emphasizing that any structured transaction would require shareholder approval.

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