The Zee group stocks reeled under selling pressure despite the Subhash Chandra-led Essel Group on Sunday saying it has "arrived at an understanding" with its lenders not to declare it a defaulter following the steep fall in the share prices of listed entities such as Zee Entertainment Enterprises (ZEEL) and Dish TV.
On Monday, the ZEEL stock rose 14.29 per cent to Rs 365 in early trade compared to its previous close of 319.35 on the BSE and closed 17.24 per cent higher at Rs 373.30. On Friday, ZEEL plunged 26.43 per cent on the BSE.
However, smaller stocks like Zee Learn, which lost 18.49 per cent to Rs 27.55 on Friday, hit an intra-day high level of Rs 31 and closed 7.50 per cent lower at Rs 25.30.
Zee Media Corporation ended the day at 17.95, down 18.78 per cent.
The BSE on Friday sought clarification from Dish TV India with reference to the news that a link has emerged between Essel Group and a company being probed for suspect demonetisation deposits.
The Zee group shares came under selling pressure as margin threshold for pledged shares of promoters have come down after the sharp fall in the stock prices of the media group.
An analysis of the shareholding pattern of the group companies like Zee Entertainment, Dish TV, Zee Media, Zee Learn shows that a large chuck of promoter holdings are pledged with lenders.
In the case of Zee Entertainment 59.37 per cent of the promoter holding is pledged. Other group companies like Dish TV (82.05 per cent), Zee Learn (95.45 per cent) and Zee Media (73.38 per cent) have share of pledged shares of the promoters.
Shares of Zee group companies came under massive selling on Friday plummeting up to 33 per cent, suffering a combined erosion of Rs 13,500 crore of market capitalisation.
The Serious Fraud Investigation Office is probing a company—Nityank Infrapower (formerly Dreamline Manpower)—for deposits of over Rs 3,000 crore made just after Prime Minister Narendra Modi outlawed old Rs 500 and Rs 1,000 notes in November 2016, a news website, The Wire, reported. Its investigation showed that Nityank Infrapower and a group of alleged shell firms had carried out financial transaction. Meanwhile, talking about the stock, JM Financial said “near-term movement of stock price will be driven by whether promoters are able to reach any settlement/understanding with the lenders.
Looking beyond this, we believe intrinsic value of the asset (March-20 target price Rs 550) is intact, although chances of getting a significant premium in the strategic sale have diminished, in our view, given promoter-level stress, despite increased probability of a change in control as against promoter’s initial intent to “sell up to 50 per cent” of their holding (back in Nov’18). Zee MD indicated the strategic sale may be concluded well before the March-April timeline provided initially.”
The brokerage said , “We maintain our Buy rating on ZEEL, given its market leadership (20.2 per cent network share in non-sports entertainment), strong growth outlook (17.5 per cent EPS CAGR over FY19E-21E), robust OTT strategy, and attractive valuations. Key downsides: (1) continued selling of pledged shares increasing risk of hostile takeover; (2) strategic sale transaction with a domestic entity.”