ZEEL surges 10% in weak market, up 49% thus far in June quarter; check why

Zee Entertainment Enterprises Ltd (ZEEL) share price today
Shares of Zee Entertainment Enterprises Ltd (ZEEL) hit a 10-month high of ₹146.45 as they rallied 10 per cent on the BSE in Monday's intra-day trade amid heavy volumes in an otherwise weak market.
The stock price of the TV broadcasting & software production company was trading at its highest level since August 2024. It had hit a 52-week high of ₹163.90 on July 16, 2024. Thus far in the June quarter, the stock price of ZEEL has appreciated by 49 per cent.
At 10:56 AM; ZEEL was quoting 9.6 per cent higher at ₹145.65, as compared to 0.8 per cent decline in the BSE Sensex. The average trading volumes at the counter more-than-doubled, with a combined 52.76 million shares changing hands on the NSE and BSE.
What's driving ZEEL stock price?
The promoter group of ZEEL is raising its stake in the company to 18.39 percent, up from 4.28 percent. The company's board of dDirectors approved the enhancement of promoter shareholding by issuance of upto 169.5 million fully convertible warrants to the promoter group entities on a preferential basis, at ₹132 per warrant aggregating to ₹2,237.4 crore. The preferential issue is subject to shareholders' approval.
In line with its strategic ambitions for the future, ZEEL is taking necessary steps to identify and invest in new avenues for growth and capitalize on the emerging opportunities.
The board believes that the steps being taken by the company will enable it to remain well-poised for future investments by further strengthening its balance sheet with access to significant growth capital. Additionally, the infusion of funds from the promoters will enable the company to further fortify its core business segments and strengthen its financial foundation to explore value-accretive growth opportunities in the evolving Media & Entertainment landscape.
Meanwhile, according to media reports, the promoters of ZEEL, Subhash Chandra and his family, are expected to recover through the Essel group around ₹1,300 crore in one year from various parties who owe money to them.
ZEEL in investor presentation, released on Sunday, June 23, highlighted that the 'Z' to create a significant cash reserve in order to compete effectively with the competitor and to act proactively to address any rapid market shift. The company has to enhance its digital offerings in a profitable manner both domestically and internationally without going beyond content ecosystem.
For growth initiatives the company said it is developing new business verticals to expand its target audience and augment revenue streams. Micro dramas, UGC, Live Events, Edutainment, Emerging Sports, etc. the company is developing new distribution business model to capture and retain a larger pool of eyeballs.
The capital deployed in the growth initiatives will be aimed at enhancing the profitability of the company in next 3 years and surpass the highest EPS delivered by the company on enhanced capital base, the company said.
Motilal Oswal Financial Services view on ZEEL
ZEEL aims to deliver revenue CAGR of 8-10 per cent with its current portfolio and improve EBITDA margins to an industry-leading range of 18-20 per cent by FY26. The brokerage firm believes that a sustainable recovery in ad revenue remains key to achieving these aspirations and driving a potential re-rating of multiples.
'Our earnings estimates are unchanged as we await more clarity on the use of promoter fund infusion (~₹ 2,200 crore) and FCCBs (~₹ 2,000 crore). However, the fund infusion will provide ZEEL with enough firepower to improve its competitive position in the industry,' Motilal Oswal Financial Services said.
As noted earlier, Zee's valuations have turned attractive. However, a sustained recovery in domestic advertisement revenue and a favorable outcome in ongoing litigation for ICC rights with Star remain key for rerating, the brokerage firm said.

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