ValuePickr Forum

ZEE Entertainment - Large Cap M&E

Last week, you have mentioned, you do not have holdings in Zeae. Now you are stating that you have investments. Have you entered after this 10% fall ? If so, i assume you must have more insight and what about your comparative study among Zee, Star, Sony regarding inventory increase due to media content and corresponding amortization expense in P&L account ?

No I have not yet made any investments and thatā€™s what I saidā€¦I am not biased due to investmentsā€¦

I just went through all the happenings of Zee Entertainment in last 24 monthsā€¦to see what exactly did go wrong hereā€¦ And I feelā€¦ All big players are eyeing the crown jewel of Essel group Zee Entertainment to get the promoters exit desperately because they know that Punit Goenka is not going to give control easily and so is being draggedā€¦right ā€¦leftā€¦
.upā€¦downā€¦

I do feel Zee may have lot more volatility going ahead butā€¦I donā€™t doubt the Zee group businessā€¦

I will post my detailed reads/observation hereā€¦ And yes I have not taken your comments personally at allā€¦

We all here are to learnā€¦ Letā€™s get to more details hereā€¦

Cheers

Infact this looks like a solid investment at cheap valuations. But when you see management conduct over last couple of years. It inspires zero confidence. I am more worried that they have not been able to find a strategic investor for largest media asset in such a large market.

One way to look at Zee:

Market cap 13500 cr (approx)
Avg PAT : 1900 cr (past 3 years)

So if you were to buy the entire business today for 13500 cr, you would breakeven in about 7 years. Does not matter what the promoter did or didnt to before today.
This is what a strategic investor is looking at. That makes zee an attractive target.
Its all about waiting out the storm.

Disc: invested

I believe as we speak, the tussle is going on between financial investors and promoters. Investors are pushing for more transparency, more housekeeping and cleaning up of the books. Puneet and his team are naturally reluctant to do so in one lot. But they have started acting on it and outcome was recent announcement that Zee is changing, more disclosures, more transparency and in turn more provisions and more losses disclosed etc. One pointer towards that the 2 delays in Mar 20 conference call (which in first place was declared one day before or on the same day of results). and consequent delay in declaring the results. It seems it was not decided how much "dirt"needs to disclosed in Mar 20 quarter.

Based on my experience with similar promoter based companies changing hands, I guess it will be few more quarters before all old issues are taken care of. So much more pain in store for the financials. Hence I donā€™t expect the stock to run away unless promoters negotiate their way out of this company while keeping their head held high. If that happens, the stock will jump in hope of a new beginning as the Zee franchise is very strong and lof of strategic investors would be interested in investing.

Disclosure - a tracking position taken in pre-covid days and hence continue to hope for better tomorrow :wink:

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Interesting management interview

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