MUMBAI: Zee Telefilms continued its upward rise on the Indian stock markets, edging up 0.78 per cent to Rs 103.75 on the Bombay Stock Exchange (BSE). The scrip witnessed volumes of 2,702,537 and touched a high of Rs 104.05. On the NSE, the scrip rose by 1.07 per cent and finished the day at Rs 104.05 with volumes of 4,385,079. 
Zee CMD Subhash Chandra, who is currently actively managing the affairs of the company, seems to know exactly what kind of a fare will be lapped by the stock market operators, if not the audiences. The markets seem to be gung-ho about Zee's forthcoming mix for the next quarter that includes a prize money of Rs 1.21 billion under the Mahalotto Megawin contest.
Zee, in association with E-Cool Gaming Solutions had announced its MEGA contest that would enable its viewers to win Rs 1.21 billion within three months starting 5 January 2003. Zee will be giving its audience an opportunity to win free prizes worth Rs 10 million every day and Rs 40 million on Sundays in addition to the Rs 5 million for a "Dekho Dhoom" contest.
The other triggers for increased interest in the stock seem to be linked to the impending announcement of good quarterly results; hike in subscription rates; its possible entry into the expanded list of scrips in the derivatives segment; successful revamping of the company’s flagship television channel - Zee TV - that has boosted the TRP ratings of the channel's programmes in the last quarter.
On 7 January 2002, Zee witnessed active trading on an otherwise dull trading day. The FIIs and institutional funds conducted sustained buying and more than 3.77 million shares were traded. Since 24 December, the scrip has grown 7.4 per cent from Rs 96.60.
SSKI vice president research Nirav Sheth states: "The recent initiatives such as the cross-promotions with Playwin online lotteries that have been announced by Zee seem to be having an impact on market sentiments. The strategy might probably work well to counter the threat of World Cup. However, it is not necessary that the positive rub-off might spillover to the other programmes. Post World Cup, the programming will need to be beefed up and Zee's team needs to work on the same."
Motilal Oswal Securities media analyst Subhabrata Majumder states: "The market sentiments seem to have improved due to the good results expected in the December 02 quarter. Our estimates indicate an 18.6 per cent - the highest y-o-y growth that Zee has achieved in the last seven quarters. Our estimates also indicate a 40 per cent PAT growth. Both these figures are pretty good not just in the media sector but also in the corporate sector.
The growth is not driven merely by subscription revenues but ad revenues are also expected to rise to Rs 1.92 billion as compared to Rs 1.72 billion from from DQ 2001."
"There is also an imminent announcement about the inclusion of Zee (the only media scrip) in the derivatives futures and options trading. The recent buying by institutional funds is an indication that they seem to be interested in Zee's cross-promotional strategy with Megawin online lotteries. The Mahalotto prize money of Rs 1.21 billion (Rs 10 million a week and Rs 40 million plus on Sundays) seem to have been a positive trigger," Shubham adds.
Another financial analyst said that Zee's entry into the Top 100 viewership ratings list in the last quarter augurs well for the quarterly financial results due for announcement. The mega-prizes announced for the Megawin promotional scheme is an interesting ploy, according to him.
Others, however, don't seem so optimistic. Kotak Mahindra's media analyst Sanjeev Prasad states: "Zee TV had several programmes in the Top 100 viewership ratings list. The movie strategy seems to have worked but there is a feeling that it might not be that big an idea in the long run. The fundamentals will improve only if the Zee team realise that viewers watch TV for content and not for contests. As per our analysis, Rs 100 seems to be a fair value."
A Kotak Mahindra report dated 13 December had stated that Zee would ultimately benefit from CAS as underdeclaration disappears. However, in the near term CAS may force Zee to reduce subscription fees and focus channels on subscription or advertising but not both.
The report estimated that Rs100 price was the target price for Zee and this rationale was based on DCF and free cash multiples. It had also mentioned that Zee needed a clear-cut strategy to counter the World Cup.
It is worth mentioing that the media and entertainment sector stocks had ended the calendar year on a high note. The market sentiments had improved due to varied reasons such as the expectations of a good financial results; and indications that Zee will be raising US$ 40 million loan via an overseas corporate body (OCB).
Towards the end of the year, the Zee counter showed hectic activity due to a report in The Hindu Business Line . The report stated that the Subhash Chandra group had finalised plans to pledge equity shares of Zee Telefilms Ltd with the Zurich-based Credit Suisse First Boston Corporation (CSFBC) for a three-year term loan of $40 million.
The report mentioned that Delgrada Ltd, a Mauritius-based OCB owned by Chandra, would pledge 50 million equity shares of Zee Telefilms, having a face value of Re 1 each, with Credit Suisse First Boston, Singapore, a wholly-owned subsidiary of the Zurich-based global banking and insurance giant.
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