Zee Entertainment shares plunge to 20-month low

Reuters September 6 | Updated on September 06, 2018 Published on September 06, 2018

Shares of Zee Entertainment Enterprises Ltd plunged as much as 9.6 per cent to Rs 436.05, their lowest since December 2016. Morgan Stanley downgraded the stock to ‘underweight’ from ‘overweight’ and lowered the price target by 33 per cent to Rs 410. It has also cut FY-19/20 EBITDA estimates.

Investments in Zee5 are likely to drag margins in near term with possible break-even only likely by FY25; this could significantly decelerate EBITDA growth and de-rate valuation multiples below long-term historical averages, Morgan Stanley has said.

Zee5 is a video-on-demand website run by Zee Entertainment.

The brokerage believes Zee5 will have to spend disproportionately on high-quality content and distribution costs to drive viewership and compete against large players with both deep pockets and vast video streaming experience.

Zee was the top percentage decliner on the NSE index. The stock was down for the fifth straight session.

The stock posted its biggest intra-day fall since July 2017 and was down 17.1 per cent this year as of last close.

Published on September 06, 2018
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