Zee Entertainment shares fall after promoters’ 11% stake sale; should you buy or sell stock?

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Updated: August 1, 2019 10:43:19 AM

The shares of Zee Entertainment Enterprises fell nearly 4 per cent after Invesco Oppenheimer Developing Markets Fund agreed to buy up to an 11% stake in ZEE from its promoters, for a total consideration value of up to Rs. 4,224 Crore.

zee, zee sharesZee Entertainment shares trade lower despite the 11 per cent stake sale by promoters

The shares of Zee Entertainment Enterprises fell nearly 4 per cent after Invesco Oppenheimer Developing Markets Fund agreed to buy up to an 11% stake in ZEE from its promoters, for a total consideration value of up to Rs. 4,224 Crore. At 10:07 AM, shares of Zee Entertainment were trading at Rs 353.20, down 2.28 per cent from the last close. In a bid to repay all the lenders by September 2019, the Essel Group had initiated the process of divesting its key assets, the company said in an exchange filing. In view of the recent development, Emkay Global has recommended SELL with a DCF-based target price of Rs 341. “Weak cash generation in the last 2 years and weakening of balance sheet with aggressive content purchases, along with structural risks looming on the broadcasting business remain. Maintain Sell with a DCF-based TP of Rs341 with UW in sector EAP,” said Emkay Global in a report.

Meanwhile, foreign brokerage firm CLSA has maintained BUY on Zee stock with a target price of Rs 515. The stake sale will help the company in allaying near-term concerns. However, it also said the management continuity is critical. After completion of the transaction, Zee still needs to pay the remaining amount of Rs 6,800 by September. It expects further stake sale of 8-18%, according to CNBC TV18.  Axis Capital has also maintained BUY on Zee stock with a target price of Rs 415. It said the stake sale is healthy but overhang still remains and the company needs to complete sale of other assets in stiff deadline. It expects the Zee stock to remain sideways over the next few months. 

Since the last couple of quarters, the promoters of Essel Group have been offloading their stake in a bid to pay off the liabilities. In January 2019, Subhash Chandra had written an open letter expressing his apologies to the lenders for not being able to repay debt. Through his letter, the media baron Subhash Chandra assured of repaying each and every person. 

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