ACC has also broken down from a trading range which it was stuck into for 3 weeks. We expect the stock to decline further in the near term.
The recent world economic outlook by International Monetary Fund also said that the India’s economy is poised to pick up in 2019 benefiting from lower oil prices and a slower pace of monetary tightening than previously expected, as inflation pressures ease. It also raised the growth forecast of the Indian economy by 10 bps to 7.5%.
However, slowdown in the global economy due to weakness in Europe and some emerging markets has raised some concerns. The United Nation on January 21 said that the global economy will grow around 3 percent annually in 2019 and 2020, but waning support for multilateralism, escalating trade disputes, increasing debt and rising climate risks are clouding prospects for the world’s economy.
As the general election approaches we expect private consumption to expand at a healthy clip, strengthened by strong wage growth, lower oil price and increase in Government spending. The budget is also around the corner which will be keenly watched by the investors for further clues.
We advise investors to buy/accumulate quality stocks, with strong financial and efficient management. Here are the stocks we are bullish on:
Zee Entertainment | Rating: Buy | Target Price: Rs 550
Zee’s robust domestic ad growth is expected to continue due to the favourable ad environment, sustained focus on regional markets (GEC launch in Kerala) and adding movie channels in Tamil and Kannada. Zee’s Q3 FY19 revenue grew 17.9% y/y to Rs 21.67 billion (Rs 2,167 crore) as advertising revenue and domestic subscription revenue grew well.
Management indicated that the earlier guidance of 90 original shows in FY19 will not be achieved (it presented 31 originals currently). As per management, it is stepping up investments in Zee5 and has an annual target of 72 web series (six per month) launched in FY20 across six languages.
The company is also looking to launch Zee5 in the Asia Pacific region by Q4 FY19 and globally (excl. the US) by Q1 FY20. Subscription charges would be $2 to $10 a month. It guided to a 30%+ EBITDA margin in FY20 despite elevated content spend on Zee5.
Zee is seeing improved visibility in ad-spends and expects the growth momentum to continue in FY20 as well. It expects FY20 advertising growth to be in the mid-teens.
The management guided low-to-mid-teen subscription growth for FY20. Zee is likely to maintain a steady 30%+ margin, irrespective of the increased investment it makes either on its content or digital platforms
We raise our FY20/FY21 EBITDA estimates 5.4% each and, consequently, our target price to Rs 550 from Rs 530 earlier
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