Zee Entertainment Neutral; goal of Rs 200: Motilal Oswal

Zee Entertainment research report by Motilal Oswal Following almost two years of discussion, Sony has ended its merger cooperation agreement (MCA) with Zee and is requesting a termination payment of USD 90 million from the business for allegedly breaking the terms of the deal. Zee has declared that it will consider all of its alternatives, including taking legal action. Unexpectedly, it made reference to Mr. Punit Goenka, MD and CEO of Zee, agreeing to step down—a major point of dispute between the two groups. We therefore reduce our assessment of the stock to Neutral.Prospects The stock would be worth INR167 per share, nevertheless, if we assume that OTT's profitability will not materially improve and attribute 15x on FY26E PAT of INR10.7b (which accounts for a slight improvement in the linear TV sector and corrections for recent one-offs). With a TP of 200 (18x on one-year future P/E), we downgrade the stock to Neutral as a result.Disclaimer: Moneycontrol.com's investing gurus, brokerage firms, and rating agencies offer their own opinions and suggestions; the website's management does not share these viewpoints. Users are advised by Moneycontrol.com to consult with qualified professionals before making any financial decisions.