Zee Entertainment jumps 6% as NSE reincludes stock in F&O segment

Shares of Zee Entertainment Enterprises (ZEEL) surged 6 per cent to Rs 194.80 on the National Stock Exchange (NSE) in Tuesday’s intra-day trade after the exchange on Monday announced that it would include the stock back into the futures and options (F&O) segment.

NSE's move comes after the National Company Law Appellate Tribunal (NCLAT) decided to put a stay on the National Company Law Tribunal (NCLT) order admitting insolvency proceeding against ZEEL.

At 09:24 AM; ZEEL quoted 4.4 per cent higher at Rs 191.05, as compared to 0.06 per cent rise in the Nifty 50. A combined 3.8 million shares changed hands at the counter on the NSE and BSE.

The stock of TV broadcasting & software production had dipped 15 per cent in past six trading days between February 17 and February 27, after NCLT last week admitted an insolvency petition filed against ZEEL by IndusInd Bank.

However, NCLAT, Principal Bench, New Delhi vide order dated February 24, 2023 granted stay on the NCLT, Mumbai Bench, Court III order dated February 22, 2023 w.r.t IBC proceedings initiated against ZEEL.

NSE said that post the NCLAT order, ZEEL will move out of the IBC framework and hence the surveillance action in the stock shall be reverted. Thereafter, NSE informed that the futures and options contracts with May 2024 will be available on  ?Zee Entertainment.

"NCLAT, principal bench, New Delhi vide order dated February 24 has granted stay on NCLT Mumbai bench order dated February 22 w.r.t. IBC proceedings against ZEEL, " the exchange said in a circular. CLICK HERE FOR CIRCULAR

After admission of insolvency proceedings by NCLT, the stock price corrected as ongoing arbitration issue can delay the merger time-line with Sony Pictures Networks India Private Limited (SPNI). Unless ZEEL settles the dispute amicably or achieves a stay on the order, merger time-line can get delayed further; Prabhudas Lilladher said post NCLT order on February 23.

The brokerage firm retained 'BUY' rating on the stock with a target price of Rs 277 (21x Sep-24 EPS). However, given there are concerns over delay in merger time-line (primary premise of our BUY call) the stock can be under pressure in near term, it added.

ZEEL had a cash balance of Rs 672.6 crore as of December 2022 and hence even if it is made liable to pay to all the outstanding claims, it will be left with a cash balance of Rs 228.5 crore.