Sharekhan is bullish on Zee Entertainment Enterprises and has recommended buy rating on the stock with a target of Rs 367 in its July 1, 2014 research report.
"Zee Entertainment Enterprises, among the key stakeholders of the domestic TV industry, we expect the broadcasters to be the prime beneficiary of the mandatory digitisation process initiated by the government. The broadcasters would benefit from higher subscription revenues at the least incremental capex as the subscriber declaration improves in the cable industry. On completion of 20 years of operations, ZEEL has issued redeemable preference shares (RPS) aggregating Rs2,000 crore (6% preference dividend ) for eight years. The RPS will be issued at a ratio of 21 RPSs for every equity share. The RPS will be redeemable from the fourth year till the eighth year."
"ZEEL's management acknowledged that the recent TRAI recommendation of capping the advertisement time at 12 minutes per hour would have an adverse impact on its advertisement volume. The company will take adequate hikes in the advertisement rates in order to negate the impact of reduced volumes. Thus, we expect a very minimal impact on the blended advertisement growth in FY2015 and FY2016. ZEEL is well placed to benefit from the ongoing digitisation theme and the overall recovery in the macro economy. Additionally, phase-wise rate hikes in the channel rates would augur well for the subscription revenues. We have incorporated potential tax benefits from a merger of DMCL in FY2016. We maintain our Buy rating on the stock with a price target of Rs367," says Sharekhan research report.
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