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Essel Chief’s stake sale talk lifts ZEE stock

Analysts have started re-rating Zee Entertainment Enterprises (ZEE) after Essel Group chairman Subhash Chandra said he will sell 16.5 per cent stake in the company to investors. The average target price on the stock has been raised to Rs 405 against the current market price of Rs 345 as the stake sale reduces the risk of pledged stocks flooding the market.

Essel promoters will use the stake sale proceeds to repay a large portion of the debt. Shares of Zee rallied 12.44 per cent to Rs 345.35 on Thursday.

“All in all, it is a better outcome than what it looked likely at the peak of the Essel Group’s debt crisis. Zee’s execution remains healthy in a challenging environment.” said GV Giri, analyst, IIFL Securities. “Over time, US media players could consider acquiring a stake in Zee, potentially triggering an open offer; but this is still some time away.”
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