Media , entertainment Q1 preview :Parks to benefit from seasonality, media subdued

Media: Industry-wide box office collections increased 4.1% YoY to ~Rs 19.4 billion in Q1 FY25 led by Kalki 2898 AD and Munjya. Given the modest growth in collections, we expect PVR-Inox Ltd. to report footfalls of 30 million, resulting in a pre IND AS Ebitda loss of Rs 719 million.

On the broadcasting side, ZEE Entertainment Enterprises Ltd.’s performance is likely to be impacted by diversion of ad-spends to sports/news genre due to IPL, CWC T20 and general elections. However, we expect Ebitda margin to improve to 11.6% amid ongoing cost rationalisation efforts on content, technology, marketing and manpower.

Entertainment: Persistent headwinds in Kiddopia, Real Money Gaming and AdTech businesses is likely to slow down the growth trajectory for Nazara. However, recent acquisition of Freaks is likely to re-ignite growth prospects of the Esports segment, and we expect further inorganic opportunities to materialize given Nazara has Rs 14.5 billion of cash on books.

For Imagicaa, given this is a maiden quarter of consolidation of four assets at Lonavala and Shirdi and a seasonally strong quarter for water parks, we expect topline growth of 78% YoY with an Ebitda margin of 51.9%. In addition, the new park at Indore is likely to begin operations in FY25E, acting as a new catalyst for growth.

Top picks:
We believe Imagicaa is on a strong growth path led by the consolidation of parks at Lonavala, Shirdi and Indore from FY25E, and it is our preferred pick in the media and entertainment universe with a target price of Rs 112. Prabhudas Lilladher