The merged entity and its management team will benefit greatly from ZEEL’s competence in content production and deep customer connections,
Rakesh Jhunjhunwala has earned a mark-to-market profit of Rs 50 crore in eight days on his share purchase of Zee Entertainment Enterprises Ltd. Last week, amid Zee Entertainment Enterprises boardroom tussle, Rakesh Jhunjhunwala’s Rare Enterprises bought 50 lakh shares of ZEEL at Rs 220.44 per share in bulk deals. Today, ZEEL stock surged to a fresh high of Rs 321 apiece, rallying over 25 per cent from the previous close, after the company’s Board of Directors approved a merger with Sony Pictures Networks India. With today’s gain in the share price, Jhunjhunwala has earned a profit of over Rs 100 per share, totalling Rs 50 crore.
The Board of Directors of ZEEL has also approved the execution of a non-binding term sheet with Sony Pictures which will allow Punit Goenka to hold his chair for a period of five years. With this, Punit Goenka will retain his position as MD and CEO of ZEE group, fending off Invesco’s attempt to get him off the Board. The merged entity and its management team will benefit greatly from ZEEL’s competence in content production and deep customer connections, as well as Sony’s success across entertainment genres, Likhita Chepa, Senior Research Analyst, CapitalVia Global Research, told Financial Express Online. Chepa added that this might increase the shareholders’ value multifold over the long term thereby strengthening its prospects.
It may be noted that Rakesh Jhunjhunwala or Rare Enterprises name does not figure in the shareholding pattern of ZEEL as names of only those entities are shown that own over 1 per cent stake in the company.
Analysts have recommended investors to remain cautious after the sudden surge in the Zee Entertainment stock price. “We recommend investors to be cautious as ZEEL rallied over 78 per cent from Rs 170 in the last one month, and as of now valuations are not disclosed by the ZEEL,” Yash Gupta, Equity Research Analyst, Angel Broking, said. Analysts expect ZEEL to get significantly re-rated. It currently trades at 23x/19x FY22/FY23 earnings, Ashwin Patil, Senior Research Analyst, LKP Securities, said.
Last week, apart from Rare Enterprises, BofA Securities Europe SA purchased 48.65 lakh shares of ZEEL at an average price of Rs 236.2 apiece, and Jump Trading Financial India Pvt Ltd bought 1.02 crore shares at an average price of Rs 236.50 and sold at a price of Rs 236.66 apiece.
(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)
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