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Zee, in association with E-Cool Gaming Solutions had announced
its MEGA contest that would enable its viewers to win Rs 1.21 billion
within three months starting 5 January 2003. Zee will be giving
its audience an opportunity to win free prizes worth Rs 10 million
every day and Rs 40 million on Sundays in addition to the Rs 5 million
for a "Dekho Dhoom" contest.
The other triggers for increased interest in the stock seem to
be linked to the impending announcement of good quarterly results;
hike in subscription rates; its possible entry into the expanded
list of scrips in the derivatives segment; successful revamping
of the company’s flagship television channel - Zee TV - that has
boosted the TRP ratings of the channel's programmes in the last
quarter.
On 7 January 2002, Zee witnessed active trading on an otherwise
dull trading day. The FIIs and institutional funds conducted sustained
buying and more than 3.77 million shares were traded. Since 24 December,
the scrip has grown 7.4 per cent from Rs 96.60.
SSKI vice president research Nirav Sheth states: "The recent
initiatives such as the cross-promotions with Playwin online lotteries
that have been announced by Zee seem to be having an impact on market
sentiments. The strategy might probably work well to counter the
threat of World Cup. However, it is not necessary that the positive
rub-off might spillover to the other programmes. Post World Cup,
the programming will need to be beefed up and Zee's team needs to
work on the same."
Motilal Oswal Securities media analyst Subhabrata Majumder states:
"The market sentiments seem to have improved due to the good
results expected in the December 02 quarter. Our estimates indicate
an 18.6 per cent - the highest y-o-y growth that Zee has achieved
in the last seven quarters. Our estimates also indicate a 40 per
cent PAT growth. Both these figures are pretty good not just in
the media sector but also in the corporate sector.
The growth is not driven merely by subscription revenues but ad
revenues are also expected to rise to Rs 1.92 billion as compared
to Rs 1.72 billion from from DQ 2001."
"There is also an imminent announcement about the inclusion
of Zee (the only media scrip) in the derivatives futures and options
trading. The recent buying by institutional funds is an indication
that they seem to be interested in Zee's cross-promotional strategy
with Megawin online lotteries. The Mahalotto prize money of Rs 1.21
billion (Rs 10 million a week and Rs 40 million plus on Sundays)
seem to have been a positive trigger," Shubham adds.
Another financial analyst said that Zee's entry into the Top 100
viewership ratings list in the last quarter augurs well for the
quarterly financial results due for announcement. The mega-prizes
announced for the Megawin promotional scheme is an interesting ploy,
according to him.
Others, however, don't seem so optimistic. Kotak Mahindra's media
analyst Sanjeev Prasad states: "Zee TV had several programmes
in the Top 100 viewership ratings list. The movie strategy seems
to have worked but there is a feeling that it might not be that
big an idea in the long run. The fundamentals will improve only
if the Zee team realise that viewers watch TV for content and not
for contests. As per our analysis, Rs 100 seems to be a fair value."
A Kotak Mahindra report dated 13 December had stated that Zee would
ultimately benefit from CAS as underdeclaration disappears. However,
in the near term CAS may force Zee to reduce subscription fees and
focus channels on subscription or advertising but not both.
The report estimated that Rs100 price was the target price for Zee
and this rationale was based on DCF and free cash multiples. It
had also mentioned that Zee needed a clear-cut strategy to counter
the World Cup.
It is worth mentioing that the media and entertainment sector stocks
had ended the calendar year on a high note. The market sentiments
had improved due to varied reasons such as the expectations of a
good financial results; and indications that Zee will be raising
US$ 40 million loan via an overseas corporate body (OCB).
Towards the end of the year, the Zee counter showed hectic activity
due to a report in The Hindu Business Line . The report stated
that the Subhash Chandra group had finalised plans to pledge equity
shares of Zee Telefilms Ltd with the Zurich-based Credit Suisse
First Boston Corporation (CSFBC) for a three-year term loan of $40
million.
The report mentioned that Delgrada Ltd, a Mauritius-based OCB owned
by Chandra, would pledge 50 million equity shares of Zee Telefilms,
having a face value of Re 1 each, with Credit Suisse First Boston,
Singapore, a wholly-owned subsidiary of the Zurich-based global
banking and insurance giant.
Media stocks gain on the
last day of 2002
Zee pits innovative
themes,greed against cricket
Zee bouquet has better breadth
- JP Morgan CAS report
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