MUMBAI: Even as brokerages upgraded the Zeel stock a day after the company inked a merger deal with Sony Pictures’ subsidiary, heavy volumes and delivery-based trades were witnessed on the secondary market.
Delivery to traded quantity stood at 1.62 crore shares, the highest in absolute terms in three months, on December 22. On Thursday, the delivery percentage was 35%, according to exchange provisional data, which showed that of the 2.6 crore shares traded, over 92 lakh were delivered.
The Zee-Sony deal is subject to regulatory, shareholder and other customary approvals. At around Rs 340-level, the share has already doubled from a 52 -week low of Rs 166.8 on August 21.
The finalisation of the merger talks between Zee and Sony Pictures has resulted in some profit taking on the stock but brokerages remain upbeat on the long-term prospects of the merged entity once the deal is approved.
Citi and CLSA each maintained a buy rating on the stock with the latter noting that valuations could return to historical highs of 30 times P/E (price to earnings) when the “deal is sealed.”
CLSA has a price target of Rs 415 on the stock, implying around 22% upside from the current level. Noting Sony’s ability to leverage large scale opportunities in the Indian media space, Motilal Oswal has upgraded the stock to a buy with a target price of Rs 425.
Citi has a target price of Rs 395 and lays stress on monitoring how Invesco and other key institutions vote on the deal.
Even before the brokerage put out their calls, investors thronged the Zee cash counter on the secondary market, trading 7.06 crore shares, the second-highest by number in 3 months. Of the traded quantity, 1.62 crore were delivered, the highest in three months, on December 22. The delivery to traded quantity was a robust 23%.
Vishal Wagh, research head, Bonanza Portfolio, expects further profit booking, given the recent run up, before the stock begins “climbing higher” and testing the 52-week high of Rs 378.7 on December 15.
With the stock coming under ban on the derivatives segment of stock exchanges Wednesday and Thursday, punting had shifted to the cash market, going by the “hefty” traded volumes, said Hormuz Maloo, director, AFco Investments.