ZEEL share price has surged 65 per cent to Rs 362.85 in just 10 days after Rakesh Jhunjhunwala bought 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 purchase value of Rs 110.22 crore. Based on current price, and back-to-back upper circuits in the stock from the date of his purchase, the investment is now worth Rs 181.4 crore, a mark-to-market profit of Rs 142 per share, or Rs 71.4 crore, over the acquisition price.
ZEEL share price 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 approved a merger with Sony Pictures Networks India, along with the execution of a non-binding term sheet that will allow Punit Goenka to hold his chair for a period of five years. Analysts said that ZEEL stock, despite the rally in the last couple of weeks, is still 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, said.
Khemka added that it would be sometime before the Zee and Sony Pictures deal reaches fruition and the company may witness structural changes to the business, board, and leadership. Thus, the stock may trace key milestones of the deal and operational performance. “For now, we maintain a neutral rating with a revised target price of Rs 320, valuing Zee at 23x FY23 EPS,” he said.
Those at Edelweiss Securities have recommended buying ZEEL shares, with a revised target price of Rs 428, from Rs 343 earlier, as board-related concerns are likely to get addressed one way or another. Post-merger, the combined entity will be a publicly listed entity and the nation’s No.1 TV broadcast company. “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 research and brokerage firm said.