ICICI Securities noted that Zee Entertainment Enterprises ‘muted' revenue was a result of the decline in ad revenue and said that the merger with Sony will likely be the focus for investors. 

The Zee Entertainment Analyst: ICICI Securities' analyst team led by Abhisek Banerjee maintained their ‘hold' rating for the stock with a target price of ₹225.

The Zee Entertainment Thesis: The analysts said that the company's 15.6% YoY slump in ad revenue at ₹1,060 crore was a result of FMCG companies keeping "ad spends under control to counter raw material inflation."

However, the company saw growth in its subscription revenue. In their research note, ICICI Securities’ analysts noted that subscription revenue jumped 13.2% YoY to ₹890 crore. Both domestic and international subscription revenue saw double-digit growth at 11.2% and 30.7% respectively.

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The company's net profit sunk 91.86% year-over-year to ₹24.3 crore. The brokerage firm attributes this massive dip to "multiple one-offs and exceptional items." One such expense was related to the Sony-Zee merger, the firm highlighted that the company spent ₹68.9 crore on merger-related costs. 

ICICI Securities pointed out that the National Company Law Tribunal (NCLT) hearing on the Sony-Zee merger is scheduled for Feb. 14 and said that it is likely to be "the most important focus area for investors in the near term."

Price Action: Shares of Zee Entertainment Enterprises slumped 1.42% to ₹215.45 in the early hours of trading on Tuesday. 

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