Global brokerage CLSA has a ‘buy’ rating on the stock with a target of Rs 380 as it finds the risk-reward highly favourable. Edelweiss said it has a target of Rs 428 as Invesco deciding not to pursue the EGM and its reiteration of support for the merger with Sony are significantly positive for ZEE and its key shareholders.
“This fits in with our earlier observation of very little risk to the merger. Looking ahead, we expect approval from stock exchanges soon, after which ZEE would apply for other approvals, including to the I&B and the CCI,” Edelweiss said.
Analysts said ZEE-Sony would be India’s largest broadcaster and second-largest OTT with 6–8 per cent synergy in revenue flowing to Ebitda. Value creation could be huge from the combined OTT app, they said, adding that a key near-term risk is the ad slowdown but that’s media industry-wide.
“With the certainty of the merger being higher given Invesco’s support and recovery in the ad market, the stock can potentially see a re-rating in its valuation. We value ZEE at 25 times FY24 EPS and maintain our Buy rating,” Motilal Oswal Securities said while suggesting a target of Rs 410 on the stock.
Post-approvals, ZEE will delist and merge with Sony. The merged entity would then get listed, which could take two–three quarters.
The merger fills in gaps in ZEEL’s portfolio in the sports, comedy and crime genres.
Value creation could be huge, which analysts said would be a must-have for subscribers.
What Invesco actually wanted out of this entire thing is very tough to understand because they are minority shareholders and the merger was only in their benefit, said Sandip Sabharwal, asksandipsabharwal.com.
The overall business environment is changing with OTT taking up more market share and the general entertainment channels have been losing market share.
“In this context, the overall long term directional play in the Zee-Sony combine will depend on how their strategy excluding the normal satellite TV or cable TV business plays out, where they have been lagging behind. They do not have a very great offering there,” Sabharwal said.
This analyst, however, does not see any significant upside left in Zee shares unless the overall market jumps and Zee rises in tandem.
“But it is in the fair zone. Now they need to perform for the stock to move up,” he said.
