Shares of ZEE Entertainment Enterprises Ltd (ZEE) climbed 8 per cent in Friday's trade after a two-member bench of the National Company Law Appellate Tribunal (NCLAT) turned down the National Company Law Tribunal (NCLT) order to stock exchanges to review their prior approval of the ZEE-Sony merger. The news came in as a respite for ZEE Entertainment shares, as the media firm reported its first quarterly loss in three years.
The stock rose 7.86 per cent to hit a high of Rs 192.80 on BSE. NCLT had directed bourses NSE and BSE to reconsider prior nod for ZEE's merger with Culver Max Entertainment (earlier known as Sony Pictures Networks India). ZEE had challenged the NCLT's order, questioning the tribunal's jurisdiction over matters such as non-compete fees.
As per earlier reports, stock exchanges had told NCLT that the promoters of Essel Group's Shirpur Gold Refinery allegedly redirected company assets to benefit themselves. The notification followed instructions from the Sebi, which had passed down an interim order and show cause notice against the refiner and mentioned violations of other regulatory provision.
On Thursday, ZEE Entertainment said its consolidated net loss stood at Rs 196 crore for the March quarter compared with a Rs 182 crore profit in the year ago quarter. Elara Securities finds the stock worth Rs 300. JM Financial too has a Rs 300 target on the stock. It said ZEE had multiple known headwinds getting into March quarter and, in that context, revenue growth, albeit weak beat its subdued expectations.
"We sense that impending merger with Sony is shaping ZEEL’s strategy to stay on the investment course to get into a post-merger position of strength. While a few minor hurdles still remain, we believe the merger is now closer," it said.
Motilal Oswal Securities said the merged entity will have strong competitive position in both linear and digital segments, which is not captured in the valuation for now. A merger timeline remains the key monitorable, it said while suggesting a target of Rs 210 on the stock.
Prabhudas Lilladher sees the stock at Rs 240. Kotak Institutional Equities has a fair value target of Rs 225 while Emkay Global funds the stock worth Rs 245. Nuvama Institutional Equities (Rs 245 target) and B&K Securities (Rs 236) also sees the stock delivering returns going ahead.
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