zee share price target: Candidate Rating | ZEE m-cap set to rise to Rs 70,000 crore after merger


NEW DELHI: Following its announcement of a merger with Sony Pictures, ZEE Entertainment has become a candidate for upgrading. A background calculation by Elara Capital analyst Karan Taurani suggests that the merged entity could reach a market capitalization of up to Rs 65,000 to Rs 70,000 crore.

On Wednesday, the stock jumped 24.97% to a high of 319.50 rupees on BSE. He commanded a market capitalization of nearly Rs 30,000 crore.

Taurani in a note said Sony’s after-tax profit (PAT) is expected to grow at a 10% lower compound annual growth rate (CAGR) in fiscal year 20-24, which translates to 1,460 crore of rupees. Elara’s estimate for ZEE PAT for FY24 is Rs 1,676 crore based on projected growth of 20 percent CAGR.

“The combined entity could have a PAT of around Rs 3,100 crore. We expect the multiples of PE to be revalued to around 18 to 20 times, with a market cap of Rs 65,000 to 70,000 crore for the whole entity, ”he said.

Taurani said Elara will follow developments in the coming months, but said ZEE looks like a candidate for structural reclassification in the Indian broadcasting space.

“The two companies can market their merged OTT offerings, which also have slightly different content. bodes well for creating a platform that has it all. This could help it become the second largest local OTT after Disney + in India, ”he said.

To give you an idea, India has four major broadcast channels or players: Star, Colors, Zee and Sony. Of these, two are merged, which will create the leading player in the entertainment industry with a 35-40% market share, said Ashwin Patil, senior fundamental analyst at LKP Advisory.

“Of this total, Zee holds around 18 to 19% of the shares. Sony has a very large portfolio and owns sports channels. ZEE will also have good access to different genres from Sony while Sony will have access to regional channels from Zee. to be a great host to take on the competition, ”said Patil.

Considering the breadth and depth of the content, the combined entity is considered to have better bargaining power with distributors – OEMs, telecom operators and other platforms. This too will be a win-win rather than going into the market separately, Taurani said, adding that ZEE has fared better than the industry on the advertising growth front because of its strong strategy.

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