Shares of Subhash Chandra-led Essel Group promoted Zee Entertainment Enterprises ended higher on Tuesday, even as the broader markets remained subdued. Should you buy the stock?
Shares of Subhash Chandra-led Essel Group promoted Zee Entertainment Enterprises ended higher of Tuesday, even as the broader markets remained subdued. Zee Entertainment shares ended 5.3% higher at Rs 469.20 on BSE. Notably, the shares ended 6% higher on NSE, to emerge as the biggest Nifty gainer for the day followed by Tata Motors and IOC, with majority of the gains coming in the last hour of trade. The shares have risen by more than 63% as compared to the recent lows of Rs 288.30. The shares had plunged about 33% intra-day on January January 25, 2019, after a media report said Essel Group’s name may figure in a probe linked to demonetisation-led deposits of Rs 3,000 crore.
Global brokerage firm Nomura retained a ‘buy’ call on the stock after revising the target stock price to Rs 553 from Rs 671 earlier. After reports that US cable major Comcast, which owns NBC Universal, and Sony Corp have been shortlisted for a potential stake sale in the firm, Nomura noted that the Zee would be a good strategic fit for the firms. “Zee has consistently delivered strong profitable growth over the last several years.
For Sony, it would help the company leapfrog in terms of profitable growth in India. For Comcast, which is struggling for growth in residential video business, it opens up a long-term growth opportunity. We, thus, believe that chances of Zee’s stake getting sold are high, and that this would allay concerns on the pledging front,” the brokerage firm said in a recent report. Nomura expects the stock to re-rate back to the long-term average of 25x FY21F P/E as the promoters resolve the pledged stake. Further re-rating will likely depend on success in digital and possibility of a strategic buyer, said the firm.
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