ZEE shares climb 8% after NCLAT review

Shares of ZEE Entertainment Enterprises Ltd. ZEE climbed 8 per cent in Friday's trading following a two-member bench of the National Company Law Tribunal NCLAT, the National Company Law Tribunal NCLT, decision to stock exchanges to review their prior approval of the ZEE-Sony merger. The news came as a respite for ZEE Entertainment shares, as the media firm posted its first quarterly loss in three years.

The stock rose 7.86 per cent to a record high of 192.80 on the BSE. The NCLT had directed bourses NationalSE and BSE to reconsider prior nod for ZEE's merger with Culver Max Entertainment earlier known as Sony Pictures Networks India ZEE, 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 an interim order and exhibit cause notice against the refiner and mentioned violations of other regulatory provisions.

ZEE Entertainment said its March quarter net loss was 196 crore compared to a year ago profit of 182 crore. JM Financial also has a target of Rs. 300 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 the imminent acquisition of 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 in a statement.

Motilal Oswal Securities said the merged company will have a strong competitive position in both linear and digital markets, which is not captured in the valuation for now. A merger timeline remains the key monitorable, it said, while hinting a target of Rs 210 on the stock.

Prabhudas Lilladher, a trader, has said the stock is at Rs 240. Kotak Institutional Equities has a fair value target of 225, while Emkay Global funds the stock worth 245. Nuvama Institutional Equities, Rs. 245 target, and B&K Securities Rs. 236 also sees the stock delivering returns going ahead.