Zee Entertainment to acquires Zee Studios' film production business; here's what it means for the company's stock

The board of Zee Entertainment has approved the acquisition of film production and distribution business from Zee Studios, a wholly-owned subsidiary, for a cash consideration of Rs 275 crore.

On valuation, Karan Taurani of Elara Capital, said, “The valuation that they have given is primarily because Zee Studios is becoming much more larger in terms of size, the kind of content they are making, the kind of films they are making from medium project to large project kind of films and that is primary the reason they are paying that Rs 275 crore.”

On outlook of the stock, Taurani said, “I do have a buy rating on this stock, but if you look at the situation specifically in terms of broadcasting industry there have been multiple headwinds in the recent past. First of course is digital consumption happening, 4G has come, you may see 5G in the next 1-2 years, video consumption is going higher because of smart phone penetration and all these things are really leaning to a big growth in this digital advertising domain.”