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ZEEL shares locked in 10% upper circuit; key investors buying stake triggers further gains

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Shares of Zee Entertainment Enterprises were locked in their 10 percent upper circuit limit at Rs 287.65 on Wednesday after ace investor Rakesh Jhunjhunwala and foreign portfolio investor BofA Securities bought a stake in the company on Tuesday.

ZEEL shares locked in 10% upper circuit; key investors buying stake triggers further gains
Shares of Zee Entertainment Enterprises Ltd (ZEEL) were locked in their 10 percent upper circuit limit at Rs 287.65 on Wednesday after ace investor Rakesh Jhunjhunwala and foreign portfolio investor BofA Securities bought stake in the company on Tuesday when the stock had soared about 45 percent intraday.
Rakesh Jhunjhunwala’s Rare Enterprises bought 50 lakh shares of the media company at Rs 220.4 through a bulk deal on the NSE. Separately, BofA Securities Europe SA also bought 48.6 lakh shares of the company at Rs 236.
Investors looked at key investors buying the stake in ZEEL as a big positive which triggered further gains in the stock.
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As of June end, foreign portfolio investor Bofa Securities Europe Sa – Odi owned a one percent stake in the company.
The media company’s stock had skyrocketed on Tuesday after top investors of ZEEL called a shareholder meeting for a management reshuffle.
Dolat Capital Market had repeatedly highlighted that potential change in management, improvement in cash flows and traction in digital business are key re-rating triggers.
With one of the key triggers being activated, the brokerage firm has upgraded its rating on ZEEL’s stock to ‘buy’ from ‘reduce’ and hiked its target price to Rs 328 from Rs 204. Dolat Capital believes the stock is currently trading at an attractive valuation.
The stock has been gaining for the last four days and has generated 62 percent returns in the period. The scrip also hit a 52-week high on Wednesday at Rs 287.65.
ZEEL may attract more investors if the concerns raised by Invesco get addressed, says Abneesh Roy of Edelweiss Securities. Speaking to CNBC-TV18, Roy said that Zee5 will be a big value generator in long term for the company.
If concerns get addressed and Zee5 picks up, then Zee’s shares can trade at 20-25 times, Roy said. He sees Zee5 contributing positively to SOTP value of Zee in future.
However, Roy thinks Zee shares going back to Rs 600 apiece currently looks difficult as volatility continues, while valuation re-rating will happen and share will go beyond the target price of Rs 343. He expects 100 bps improvement in market share for Zee next quarter onwards, with FMCG segment continuing to do well w.r.t advertising spends.