Zee Entertainment Ltd.

Equity | India | Media
Event
Update
Zee Entertainment Ltd.
March 20, 2014
Preferential Share Allotment - SUBSCRIBE
ZEE CMP (`)
CPS CMP (`)
282.10
0.76
The Preference Issue
Zee Entertainment Enterprises Limited’s (ZEE) circular on BSE says that it will issue “……21 Bonus
Preference Shares of Face Value `1 each fully paid up in the Company for every equity share of
Face Value `1 each fully paid up by such equity shareholder.”
Market Info (as on March 19, 2014)
BSE Sensex
21,832.86
Nifty S&P
6,524.05
Stock Detail
BSE Group
What this means is that a shareholder who has one share of ZEE (CMP `282.10) will get 21
Cumulative Redeemable Non-Convertible Preference Shares (Bonus Preference Shares) of `1 each.
These Bonus Preference shares will earn dividend of 6% per annum (`0.06).
A
BSE Code
505537
NSE Code
ZEEL
Bloomberg Code
Z IN
Market Cap (`bn)
270.27
Free Float (%)
Redemption Mechanism
ZEE will redeem at par value, 20% of total such Bonus Preference Shares allotted, every year from
the 4th year onwards. This works as follows:
Example: Assuming 100 Bonus Preference Shares
60%
52wk Hi/Lo
300 / 194
Avg. Daily Volume (NSE)
2572089
Face Value / Div. per share (`)
1.00
Shares Outstanding (mn)
960
Shareholding Pattern (in %)
No. of Bonus
Preference
Shares to be
redeemed
Cumulative No. of Bonus
Preference Shares to be
redeemed
Redemption
Cumulative
(%)
Redemption (%)
4
20%
20%
20
20
2
5
20%
40%
20
40
6
20%
60%
20
60
Sr.
No.
Year
1
Promoters
FIIs
DII
Others
3
43.08
47.25
4.05
5.62
4
7
20%
80%
20
80
5
8
20%
100%
20
100
Share Price Performance
Source: Company Filing on BSE
150
Cash Flow Calculation
140
130
120
Particulars
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Mar-21
Mar-22
Value per
Preference
Share (`)
1.00
1.00
1.00
1.00
0.80
0.60
0.40
0.20
-
Dividend per
Preference
Share (`)
0.060
0.060
0.060
0.060
0.048
0.036
0.024
0.012
Redemption
(`)
-
-
-
0.20
0.20
0.20
0.20
0.20
Total cash flow
(`)
0.060
0.060
0.060
0.260
0.248
0.236
0.224
0.212
Rate (WACC)
10.75%
10.75%
10.75%
10.75%
10.75%
10.75%
10.75%
10.75%
Discounted
value (`)
0.054
0.049
0.044
0.173
0.149
0.128
0.110
0.094
110
100
90
Mar-14
Jan-14
Feb-14
Dec-13
Oct-13
Zee Entertainment
Nov-13
Sep-13
Jul-13
Aug-13
Jun-13
Apr-13
May-13
Mar-13
80
BSE SENSEX
Rel. Perf.
1Mth
3 Mths
6Mths
Zee Ent (%)
6.5
(0.5)
22.6
30.6
SENSEX (%)
5.4
5.7
14.9
26.4
Source: Company data, GEPL Capital Research
1Yr
Total PV (`)
0.80
Source: Institutional Research
Analyst
Aditya Anand Bapat
+91-22- 6614 2692
[email protected]
Institutional Research
1
Equity | India | Media
Zee Entertainment Ltd.
March 20, 2014
Recommendation
For investors holding ZEE shares who have been allotted Bonus Preference Shares
As seen in the table above, assuming a Weighted Average Cost of Capital (WACC) of 10.75%, we
arrive at Present Value of `0.80 per Bonus Preference Share. Hence, for one share of ZEE, an
investor stands to gain `16.80 discounted for the entire time period of 8 years.
9
Hence, ZEE investors who have been allotted the Bonus Preference Shares are advised to
HOLD on to them.
For investors who want to trade in Bonus Preference Shares
At CMP of `0.75 of the Bonus Preference Share (which has got listed), dividend yield works out to
be 8% which is healthy.
9
Hence, we advise investors to BUY into the Preference Shares for good dividend yield
[
Institutional Research| Event Update
2
Equity | India | Media
Zee Entertainment Ltd.
March 20, 2014
NOTES
GEPL CAPITAL Pvt Ltd (formerly known as Gupta Equities Pvt. Ltd.)
Reg Office: D-21/22 Dhanraj mahal, CSM Marg, Colaba, Mumbai 400001
Analyst Certification
The following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed and that they have not received and will not receive direct or
indirect compensation in exchange for expressing specific recommendations or views in this report:
Name : Aditya Anand Bapat
Sector : Media
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