Sharekhan has given Buy recommendation for Zee Entertainment Enterprises with a target price of Rs. 310 in its research report issued on Sep 15, 2021
Sharekhan’s research report on Zee Entertainment Enterprises
The largest shareholder of ZEE Entertainment Limited (ZEEL), Invesco demanded a reconstitution of the board, with the removal of three directors and appointment of six independent directors. We believe shareholder activism would be a key re-rating trigger as this could alter the board/management, increase in cash conversion and improve efficiency of capital allocation. FY2021 free cash flow of Rs. 1,342 crore stood at 75% of EBITDA, implying a strong improvement in cash conversion over previous years. We expect earnings to report an 18% CAGR over FY2021-FY2024E.
We maintain a Buy on the stock with a revised PT of Rs. 310, given reasonable valuations and expectations of improvement of corporate governance standards.