Zee Telefilms pleased the market with its results, which went contrary to pessimistic expectations for the company.

And on Tuesday, the stock proved the biggest gainer in the 30-share BSE Sensex, up 5.08% to Rs 73.50 by 12:25 IST. The stock had moved even higher in the morning to Rs 74.95. Volumes were realtively high at 23.7 lakh shares. The scrip has now risen 12% from yesterday's low of Rs 65.55.

The counter is being pursued largely by operators, it is believed. And the discouraging factor is that FIIs are believed to be selling here. As per market talk, Jardine Fleming Brokerage is quite conspicuously selling on the counter. On Monday, the brokerage was rumoured to have sold 25 lakh Zee Telefilms shares.

For Q4 ended 31 March 2003, Zee Telefilms (on a consolidated basis) recorded a massive 75% rise in net profit to Rs 92.54 crore on a 15.8% increase in total sales to Rs 368.47 crore. The company recorded an extraordinary expense of Rs 38.61 crore (as against nil in Q4 of last year), after which the net profit registered a mere 2% rise to Rs 53.93 crore.

The results have outperformed forecasts by a capitalmarket.com poll - a net profit of Rs 55-75 crore and net sales of Rs 288-326 crore (Rs 2.88-3.26 billion).

For 2002-03, (on a consolidated basis), the company's net profit after adjusting for extraordinary expenses rose by 16.6% to Rs 227.03 crore (Rs 2.27 billion) on a 10.5% increase in total sales to Rs 1,199.32 crore (Rs 11.99 billion).

Standalone results for the fourth quarter were also impressive. For Q4 (on a standalone basis), the company recorded a massive 134.65% rise in net profit to Rs 32.57 crore on an 8.6% increase in total revenue to Rs 150.98 crore (Rs 1.5 billion). Net profit rose due to a massive cost-cutting exercise. For the quarter, total expenses declined by 17.2% to Rs 84.82 crore. For the year (on a standalone basis), the company posted a net profit of Rs 87.49 crore on total income of Rs 497.44 crore (Rs 4.97 billion).

Analysts point out that the growth in profitability is largely due to cost cutting. This, analysts feel, cannot be sustained for a long period of time. Future growth continues to be a concern for the company.

For 2003-04, Zee Telefilms feels the business environment continues to be challenging in terms of advertising revenues, which are dependent on macro economic factors and the business confidence of major advertisers. However, the company remains confident that subscription revenues will continue to grow. The company does not anticipate any lasting impact of the Cricket World Cup on advertising revenues, which has been evident in the few weeks since the culmination of the event.

BSE code: 505537