IGI Logo

New Strategy - Unlocking future

ZEEL has come out with a refreshed, detailed and multi-pronged business strategy. These prongs encompass a) growth unlock – higher ad-growth through diversification (away from FMCG), better monetisation/distribution + sharper focus on syndication revenues; b) content unlock – platform agnostic content production, focus on User Generate Content (UGC) market; and c) value unlock – through music and syndication business. These translate into FY26 aspiration of a) 8-10% Ad-rev growth; b) 18-20% EBITDA margin; c) 1.2x FCF/PAT. ZEEL has also crystallised its capital allocation framework, earmarking for pay-outs (25-30%) and growth (40%). FY25 marked the first phase of ZEEL’s turnaround journey – cost reduction, improved cash flow. With low hanging fruits largely plucked and demand environment still unfavourable, ZEEL needed more than just strategic tweaks to sustain the transformation. Its new strategy promises to do just that. Execution, as always will hold the key though. ZEEL’s execution over past one year offers hope. Value unlocking, on the other hand, is not macro or execution dependent. As we highlighted in Turning the page, ZEEL’s music business, despite being the second largest, hardly fetches any value. While a corporate action could unlock value, improved disclosures, as indicated in the new strategy, alone could commence value-discovery. With trough valuations, improved execution and potential of value-unlock ahead, investors have all to play for. BUY.

* Growth/Content unlock: ZEEL’s ad-growth blueprint includes newer verticals (e.g Retail), monetization avenues and distribution channels. The company is doubling down on Freeto-Air (FTA) and Connected TV, targeting higher ARPU and new ad cohorts. Regional language content and pricing segmentation (e.g., language packs for Zee5) are central levers to drive subscriber stickiness. On the ad-side, platform-agnostic brand solutions, geo-targeted campaigns, structured deals, and in-show brand integrations aim to enhance growth in ad revenues. ZEEL also sees FAST channels, influencer-driven advertising, and OEM tie-ups (for Zee5 placement) and UGC as incremental demand engines. These interventions will be supported by a restructured organization, expanded ad-sales teams, and new leadership across verticals.

* Strategic prong 2 - Value unlock: ZEEL is scaling its syndication vertical into a focused, standalone operation with a global mandate. A third-party valuation of their content library, coducted by an independent valuer of global repute, indicates a value substantially higher than the current book value. The company is also intensifying efforts to monetize their extensive music catalog (164mn+ YouTube subscribers) – 18,000+ songs across 22+ languages, and movie IP, comprising 6,850+ titles.

* Balanced capital allocation construct: ZEEL has outlined a clear capital allocation framework. It has earmarked ~40% of FCF for growth capex with a 2–3 year payback threshold. Focus areas include language expansion, music, digital, and international plays, with high board oversight. Dividend payout is pegged at 25–30% of PAT. Balance will be utilised for researve fund and R&D in content creation. They will also explore value accretive M&A opportunities to drive scalable growth.

Please refer disclaimer at https://www.jmfl.com/disclaimer

SEBI Registration Number is INM000010361