ZEEL share value has surged 65 per cent to Rs 362.85 in just 10 days soon after Rakesh Jhunjhunwala purchased shares at Rs 220.44 apiece last week. Jhunjhunwala’s Rare Enterprises had lapped up 50 lakh shares of Zee Entertainment Enterprises Ltd at a buy worth of Rs 110.22 crore. Based on existing value, and back-to-back upper circuits in the stock from the date of his buy, the investment is now worth Rs 181.4 crore, a mark-to-industry profit of Rs 142 per share, or Rs 71.4 crore, more than the acquisition value.
ZEEL share value has rallied 117.53 per cent from its 52-week low of Rs 166.80, touched last month. On Wednesday, the Board of Directors of Zee Entertainment Enterprises authorized a merger with Sony Pictures Networks India, along with the execution of a non-binding term sheet which will permit Punit Goenka to hold his chair for a period of 5 years. Analysts stated that ZEEL stock, regardless of the rally in the last couple of weeks, is nevertheless trading at ~20x. “Assuming the EBITDA margin would normalize closer to previous levels, improving corporate governance and operational performance could significantly aid in the long run,” Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services, stated.
Khemka added that it would be some time just before the Zee and Sony Pictures deal reaches fruition and the business could witness structural modifications to the organization, board, and leadership. Thus, the stock could trace crucial milestones of the deal and operational overall performance. “For now, we maintain a neutral rating with revised target price of Rs 320, valuing Zee at 23x FY23E EPS,” he stated.
Those at Edelweiss Securities have advised to purchase ZEEL shares, with a revised target value of Rs 428, from Rs 343 earlier, as board-associated issues are most likely to get addressed one way or one more. Post merger, the combined entity will be a publicly listed entity and the nation’s No.1 Television broadcast business. “The merger fills in gaps in ZEEL’s portfolio in sports, Comedy and Crime shows. Also, at some stage, minority investors would have had to look for a strategic investor, which gets addressed upfront,” analysts at the investigation and brokerage firm stated.
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