Event:
Zee Entertainment Enterprises (Z) has announced that the promoter group is planning to sell ~16.5% stake in Z, to financial investors, to raise funds to repay lenders with whom the shares have been pledged. Out of the above, 2.3% will be sold to OFI Global China Fund (subsidiary of Oppenheimer Funds Inc). Post this sale, Essel Group (promoters) will own ~5% in Z (encumbered holdings will fall to a meagre ~1.1%).
Quick Take:
Outlook & Valuation:
Z’s market-share of ~19% in Broadcast Entertainment TV, lowest cost content sourcing capabilities, and ability to run a tight ship while expanding in the digital space are key moats which the market was ignoring due to pledged shares issue. With this issue resolving, we believe that the market should start re-pricing the company for its strong fundamentals. Maintain Outperformer (TP Rs416 / 17.5x FY21E EPS). Further upside could possibly come from addressing balance sheet issues such as higher group receivables, investments in exotic mutual funds over the next 3-4 quarters.
Zee Entertainment Enterprises is an integrated media and entertainment company engaged in broadcasting and content development, production and distribution of films via satellites. Co. is engaged in Hindi entertainment and movies; English content programming; sports channels and programming; religious and alternate lifestyle programming; music channels; special interest channels; and high definition channels with varied programming in over 169 countries globally. Also, on Zee Bollyworld channel, Co. dubbs or subtitles movies and series in English, French, Arabic, Russian, Mandarin and Melayu- Bahasa.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
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