The day-to-day fluctuations in Zee Entertainment share prices may be keeping the market confused about the stock’s performance, but confidence in the media giant remains.
According to Utkarsh Sinha, Managing Director, Bexley Advisors, a boutique, early stage investment bank, Zee’s fundamentals have not changed. It is the financials that are creating the problem.
“The fact that there is a debt situation, the fact that there are multiple parties who have the right to sell shares, these are the things that are creating the trouble. But they (Zee) have a fundamentally good business,” he said.
Zee has remained a strong performer in a turbulent and rapidly shifting media environment. They have a strong portfolio of assets, including 37 channels across five categories in India, and 39 international channels. Besides their India reach, they reach about half a billion people in 170 countries.
This is why Sinha thinks that from the perspective of international strategic there is lot of good value to be added to Zee.
“In fact, they (Zee) are in better position to come in cheap at the given situation. Plus, if you see the fact that Zee is pretty much the only diversified media conglomerate that is available for somebody who wants to come in Indian and south Asian markets,” he said.
He added that “at this point of time given that they have time extension it would be good to have a global strategic partner rather than a financial investor which will give a strong signal to the market which shows that not only are we (Zee) taking care of the short term troubles of the company we are also thinking about the long-term and making it a good strategic investment which is going to make the company grow for the next five to 10 years.”
Essel Group issued a statement on September 25 saying that lenders have unanimously agreed to extend the timeline for making pending payments.
Given the breather that has been provided by lenders, Sinha thinks that it is likely that the remaining stake sale (the promoters had sold about 11 percent, with another 9 percent on the block) will proceed soon.
“Some of the participants who did not get in on the last round might be sniffing for this tranche, hoping for a better deal given the pressures on the promoters to sell and retire the debt,” he added.
Hence, with more time in hand bringing in a global strategic partner could help Zee Entertainment plug gaps in its technology.―Money Control