Sharekhan's research report on Zee Entertainment Enterprises
The largest shareholder of ZEE Entertainment Limited (ZEEL), Invesco demanded a reconstitution of the board, with the removal of three directors and appointment of six independent directors. We believe shareholder activism would be a key re-rating trigger as this could alter the board/management, increase in cash conversion and improve efficiency of capital allocation. FY2021 free cash flow of Rs. 1,342 crore stood at 75% of EBITDA, implying a strong improvement in cash conversion over previous years. We expect earnings to report an 18% CAGR over FY2021-FY2024E.
Outlook
We maintain a Buy on the stock with a revised PT of Rs. 310, given reasonable valuations and expectations of improvement of corporate governance standards.
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