Dish TV zooms over 100%, Zee Entertainment surges 70% from January lows

ZEEL was up 10% to Rs 490, soared 70% from its January 25, 2019 low of Rs 289, while Dish TV India up 6% at Rs 39.65, surged 106% from January 28 low of Rs 19.25 on the BSE.

Shares of Essel Group companies – Dish TV India and Zee Entertainment Enterprises (ZEEL) – have moved higher by 10 per cent on the BSE on Tuesday in an otherwise subdued market.

ZEEL has rallied 10 per cent to Rs 490, its highest level since December 18, 2018, on the BSE. The stock soared 70 per cent from its January 25, 2019 low of Rs 289 touched in intra-day trade.

Dish TV India has moved higher by 6 per cent at Rs 39.65, surging more than 106 per cent from January 28 low of Rs 19.25 on the BSE.

On January 25, 2019, the stock of ZEEL tanked 33 per cent after a report in The Wire suggested a link between Essel Group, the promoter of ZEEL, and Nityank Infrapower, a firm being investigated for suspicious deposits after demonetisation. The stock of Dish TV India, the country’s largest direct-to-home (DTH) company had touched a 10-year low on January 28, slipping 43 per cent in two trading sessions after lenders invoked the pledged shares.

ZEEL and Dish TV India however, had clarified, through a notice to the BSE, that they have no connection whatsoever with any alleged transaction(s) of Nityank Infrapower, as reported in the media.

Post fall in stock price, the management in a conference call said the promoters are on course for the completion of strategic stake sale within the stated timelines of March-April 2019. ZEEL promoters announced their intent to sell 50 per cent of their stake to a strategic partner in November 2018. Essel Group has also entered into an undertaking wherein any realization from infra deal or strategic stake sale of ZEEL will have the first right of the lenders.

Analysts at Nomura maintain ‘buy’ rating on the stock, however lower target price to Rs 553 from Rs 671 earlier.

“In collaboration with Nomura’s teams covering Sony and Comcast, we believe Zee could be a strategic fit for both of them. Zee has consistently delivered strong profitable growth over the last several years. For Sony, it would help the company leapfrog in terms of profitable growth in India. For Comcast, which is struggling for growth in residential video business, it opens up a long-term growth opportunity. We, thus, believe that chances of Zee’s stake getting sold are high, and that this would allay concerns on the pledging front,” the brokerage firm said in a report dated February 22, 2019.

We expect the stock to re-rate back to the long-term average of 25x FY21F P/E as the promoters resolve the pledged stake. Further re-rating will likely depend on success in digital and possibility of a strategic buyer, it added.

Stake sale in Zee and group’s infra asset portfolio is an immediate re-rating trigger for Dish TV India. It may play-out soon. This would lead to resolution of overhang on pledge shares, analysts at HDFC Securities said in a note with a target price of Rs 50 per share for Dish TV.

At 03:11 pm; ZEEL was trading 5 per cent higher at Rs 468, while Dish TV India quoting flat at Rs 37.35 on the BSE. In comparison, the S&P BSE Sensex was down 0.64 per cent at 35,982 points.