Zee Entertainment is the top loser on the BSE currently. The stock price slipped almost 10% to Rs.436.80, hitting a new 52-week low today. Though it since then recovered to Rs.251 levels, it remains in the deep red as of now.
The stock fell after Morgan Stanley downgraded it to “Underweight” from earlier rating of “Overweight.” It has cut down the target price from Rs.610 to Rs.410.
The reason for this downgrade – investments in Zee5 are expected to bring down the margins of the company in the short term.
The brokerage firm expects this unit to breakeven only by 2025 while the earnings of Zee Entertainment is expected to fall on account of this, depreciating its valuation.
ZEE5 is a video on demand website run by Zee Entertainment Enterprises Limited. It was launched in India on February 14, 2018 with content in 12 languages. The website also has an app, ZEE5 App. ZEE5 is vying for the same OTT space as players like Netflix that emphasize on original digital content.