Sharekhan has given Buy recommendation for Zee Entertainment Enterprises with a target price of Rs. 400 in its research report issued on Dec 22, 2021
Sharekhan’s research report on Zee Entertainment Enterprises
ZEEL and SPNI have signed the binding agreement to merge themselves. The deal structure remains in-line with the earlier announcement, where SPNI will hold 50.86% stake of the merged entity. This would likely strengthen the combined entity’s market position and create a scalable business proposition for the OTT business. Management expects synergy benefits of 6-8%, largely from revenue. ZEEL’s promotors have option to increase their stake from 3.99% to 20%. The stake’s purchase must be from the open market, which would address investor concerns.
Outlook
We maintain Buy with an unchanged PT of Rs. 400. Growth capital would be used to accelerate its OTT, movies, and premier content including sports rights.