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Buy Zee Entertainment; target of Rs 430: Emkay Global Financial

Buy Zee Entertainment; target of Rs 430: Emkay Global Financial
December 23
13:24 2021

Emkay Global Financial is bullish on Zee Entertainment has recommended buy rating on the stock with a target price of Rs 430 in its research report dated December 22, 2021.

Broker Research

December 23, 2021 / 12:43 PM IST

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

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Emkay Global Financial’s report on Zee Entertainment

Sony Pictures Networks India (SPNI) and ZEEL have signed a definitive agreement to merge ZEEL with and into SPNI. Under the deal, the entities’ linear networks, digital assets, production operations and program libraries will be combined. Post deal closing, SPNI will have a cash balance of USD1.5bn, including USD1.06bn through a rights issue by the current SPNI shareholders and a fund infusion from ZEEL promoters. With a 50.9% stake, Sony will retain management control of the new entity. With the merger agreement signed, key things to watch out for now will be Invesco’s support for the merger, timely regulatory approvals, smooth integration, strategic roadmap for OTT investments, and recovery in Zee’s viewership share in select core markets.

Outlook

We have adjusted our pro-forma estimates assuming that the benefits from the merger will start reflecting from FY24 vs. FY23 earlier. Maintain Buy with a revised Mar’23E TP of Rs430 (11x Mar’24E pro-forma broadcasting EBITDA).

For all recommendations report, click here

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