Rakesh Jhunjhunwala made a mark-to-market profit of Rs 50 crore in eight days on his purchase of shares of Zee Entertainment Enterprises Ltd. 220.44 per share in wholesale transactions. Today, ZEEL shares hit a new high of 321 rupees each, up more than 25% from the previous close, after the company’s board of directors approved a merger with Sony Pictures Networks India. With today’s gain in the share price, Jhunjhunwala made a profit of over Rs 100 per share, for a total of Rs 50 crore.
ZEEL’s board of directors also approved the execution of a non-binding list of conditions with Sony Pictures which will allow Punit Goenka to serve as chairman for a period of five years. With this, Punit Goenka will retain his post as Managing Director and CEO of ZEE Group, thus fending off Invesco’s attempt to remove him from the board. The merged entity and its management team will greatly benefit from ZEEL’s competence in content production and deep customer relationships, as well as Sony’s success in all genres of entertainment, Likhita Chepa told The Bharat Express News Online, Senior Research Analyst, CapitalVia Global Research. Chepa added that this could multiply long-term shareholder value by several folds, thereby strengthening his outlook.
It should be noted that the name of Rakesh Jhunjhunwala or Rare Enterprises does not appear in the ZEEL shareholding scheme, as only the names of entities that hold more than 1% of the company’s capital are shown.
Analysts have advised investors to remain cautious after the Zee Entertainment share price surges. “We recommend investors to be cautious as ZEEL has risen over 78% from Rs 170 in the past month, and at the moment valuations are not being disclosed by ZEEL,” said Yash Gupta, Equity Research Analyst Angel Broking. Analysts expect ZEEL to be significantly reassessed. It is currently trading at 23x / 19x FY22 / FY23 earnings, said Ashwin Patil, senior research analyst, LKP Securities.
Last week, outside of Rare Enterprises, BofA Securities Europe SA bought 48.65 lakh shares of ZEEL at an average price of Rs 236.2 a piece, and Jump Trading Financial India Pvt Ltd bought 1.02 crore shares at a average price of Rs 236.50 and sold at a price of Rs 236.66 each.
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