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We downgrade our score to ‘Cut back’ from ‘Purchase’ with revised goal worth of Rs 151 after assigning a a number of of 12 occasions to our Sep-25 earnings per share of Rs 13 as Sony has terminated its merger cooperation settlement with Zee Leisure Enterprise Ltd.’s.
Aside from sharp de-rating in valuation a number of, we consider dissolution of merger is not going to solely end in a monetary pressure on Zee on account of termination cost, but additionally creates an uncertainty surrounding the pay-out regarding ICC rights placing its sports activities aspirations on backburner.
As well as, Zee is now saddled with irreversible sunk value of Rs 3.7 billion incurred in the direction of merger.
We consider de-rating in valuation a number of will likely be sharp as governance low cost would now come into play and apt benchmarking historical past could be a 12 months previous to Covid.
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