Pressure on Zee Entertainment stock amid stake sale by promoters

Deal structure, choice of partner coming into the company are key factors

The stock of Zee Entertainment shed 8 per cent on concerns regarding the stake sale by promoters, rising competition, higher investments in the over-the-top (OTT) application segment, and near-term pressure on subscription revenues. While analysts believe the near-term earnings growth is expected to be strong, the uncertainty around the kind of strategic investor, quantum of stake sale and deal structure, is leading to pressure on the stock.
 
An analyst at a domestic brokerage believes a minority stake sale, especially to a financial investor, may not help as funds will go to the promoters rather than to the company.