Mumbai: Shares of Zee Entertainment Enterprises Ltd have surged over 30% in the last two sessions even as the company faces growth challenges. Essel group's company Dish TV India also shot up nearly 50% in the last two sessions on the back of higher volumes.
At 2.20 pm, Zee Entertainment stock was up 14.65% at ₹299 a share, while Dish TV was 27% higher at ₹15.82 a share.
Analysts said, despite the negative news, the sharp surge in share prices could be due to hopes of fresh fund infusion.
The company reported a muted 1.2% year-on-year revenue growth in advertisement to ₹1,220 crore. EBITDA margin dipped 270 basis points a year ago to 31.5%. Profit after tax grew 3.8% to ₹530 crore.
"Near term concerns like a softer ad outlook due to macroeconomic challenges, promoter pledge issues as well as possible risks of tweak in NTO policies makes us cautious. Furthermore, steep spending in content seems aggressive. We also remain wary of related party dues, given their weak financial position," said ICICI Direct Research in a 18 October note to its investors.
Earlier ETNow reported that the lenders to Essel Group promoters expressed misgivings about the lack of information regarding additional stake sale in Zee Entertainment and shot down a proposal to park the promoter stake in an escrow account till the completion of the transaction.
On 5 October, Mint reported that Essel Group has told its investors that none of ZEEL’s shares were pledged to Russia's VTB Capital Plc, in the structured loan arrangement inked between the firms in September 2017. The development comes after both, VTB Capital Plc and Essel Group, disclosed to stock exchanges on Friday that ZEEL's promoters have created an encumbrance on 10.2 crore shares, translating to a 10.7% stake held by promoter entity Essel Media Ventures Ltd, in favour of VTB Capital.
Promoters of Essel Group have a debt of ₹11,000 crore. Essel Group companies together owe another ₹11,400 crore separately.
To repay the debt, the promoters recently agreed to sell an 11% stake in Zee Entertainment Enterprises Ltd, the group’s flagship media and entertainment firm, for ₹4,224 crore to US-based Invesco Oppenheimer Developing Markets Fund. In October 2018, Essel Infra sold two operating power transmission assets to Sekura Energy Ltd, backed by Edelweiss Infrastructure Yield Plus fund.