Zee shares halt 4-day fall, climb 3% today as NCLAT stays insolvency proceedings

Shares of Zee Entertainment Enterprises climbed in Friday's trade, halting their losing run for four consecutive sessions. The stock turned positive after the National Company Law Appellate Tribunal (NCLAT) stayed an order passed by the National Company Law Tribunal (NCLT) which initiated a corporate insolvency resolution process (CIRP) for the company, following a petition filed by IndusInd Bank.

The scrip rose 2.94 per cent to hit a day high of Rs 204.60 over its previous close of Rs 198.75. The counter has slipped 6.34 per cent in the past five sessions. Around 9.41 lakh shares changed hands today on BSE, which was higher compared to the two-week average volume of 5.37 lakh shares. Turnover on the counter stood at Rs 18.52 crore, commanding a market capitalisation (m-cap) of Rs 19,244.01 crore. There were 3,57,540 buy orders against sell orders of 3,52,404 shares.

A bench of NCLAT Chairperson Justice Ashok Bhushan and Member (Technical) Barun Mitra stated in the order, "Issue notice to respondents. Reply in two weeks, rejoinder in two weeks thereafter. List for final disposal on March 29. Till that time, the order dated February 22 is stayed," as mentioned in a report in Bar and Bench.

Zee has argued that the NCLT order was in complete violation of the principles of natural justice.

The case revolves around IndusInd's appeal against Zee for the resolution of a total financial debt of around Rs 90 crore. It sought CIRP under the Insolvency and Bankruptcy Code (IBC) against Zee. The matter pertains to default by Zee Group's multi-system operator arm Siti Networks, for which Zee was a guarantor.

Zee filed a cross-application challenging the maintainability of the petition by the bank, which was rejected by the NCLT. The tribunal also rejected the oral request by Zee to stay the order for two weeks.

It then appointed an interim resolution professional, which prompted Punit Goenka to approach NCLAT.

As per the existing bankruptcy laws, ZEEL can settle the dues with the private sector lender, which can help avoid troubles for its merger with Sony. The merger has already received multiple statutory clearances, but some of the lenders are insisting on clearing their dues before moving ahead.

"We respect the NCLAT decision and remain committed to protecting the interests of all stakeholders. Our focus continues to be on the timely completion of the proposed merger," Goenka said after the order.

The stock was last seen trading lower than 5-day, 20-, 50-, 100- and 200-day moving averages. The counter's 14-day RSI (Relative Strength Index) came at 26.61. A level below 30 is defined as oversold while a value above 70 is considered overbought. The stock has a P/E (Price to Earnings) ratio of 22.82. The company's Earnings Per Share (EPS) came at 8.71, lower than the P/E ratio.

Zee Ent has an average target price of Rs 265.75, as per Trendlyne, suggesting a potential upside of 32.89 per cent. The scrip has a one-year beta of 1.22, indicating high volatility.

Meanwhile, Indian equity benchmarks traded lower in afternoon deals, dragged by consumer goods, technology, automobile and metal stocks.

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