Zee Entertainment surged after MD and CEO Punit Goenka said that the merger with Sony is in its final stages of stitching up.
He went on to say that merged entity will form the largest media entertainment player in the country.
He added that the capital infusion by Sony in the merged entity will allow investing in premium content including sports.
As per the on-binding agreement, Zee will hold 47 percent and Sony India will hold 53 percent in the merged entity.
Globally mergers have seen revenue synergies around 6-7 percent and the management is expecting similar kind of synergies for the merged entity.
Also, Zee will focus on maintaining ROCE at current levels.
Additionally, going ahead Zee is expected to see potential benefit strongly from the revival in ad spending and management after their Q2FY22 earnings clearly indicated that ad revenues will go back to pre-COVID levels not only for Zee but at industry level.
Zee, also, managed to gain market share by 70 basis points (bps) during the last quarter on new launches and is further expecting market share in the upcoming quarters.
The stock is up 12 percent so far this month, up 50 percent so far this year and is trading at 16 times one-year forward versus 9-10 times post this deal announcement.
Watch the accompanying video of CNBC-TV18’s Nupur Jainkunia for more details.