Zee Telefilms: Fund managers' punch bag

Salil Panchal/Netscribes

The Zee Telefilms scrip seems to have become the favourite whipping boy of every fund manager and foreign institutional investor. Over the past few trading sessions, the counter has witnessed selling pressure at higher levels and even as speculative trading towards Monday's close pushed the scrip up to Rs 390 on the Bombay Stock Exchange (with 11.4 million shares traded), analysts. Fund managers almost seem to have given up hope on the scrip.

The stock was at the Rs 394-395 levels during early trade on Wednesday.

It is learnt that certain amount of selling pressure came from larger fund houses like Prudential-ICICI and SBI Caps. Zee is among the key counters in the portfolios of mutual funds like UTI, Kothari Pioneer, Tata Mutual, ING Baring, IDBI and Kotak Mahindra.

A section of the market has also started questioning Zee's revenue model. The Zee-Asianet deal falling through has only added to the company's woes. Market watchers say that until the company's revenue model is outlined clearly, uncertainty at the counter would continue.

There are some other factors, too, that have contributed to the volatility at the counter. For instance, a few days ago, there were reports that Morgan Stanley Dean Witter had come out with a report placing future projections for the Zee Telefilms scrip at Rs 1,020. There were also reports that the coveted (and much-delayed) Zee ADR mandate would be handed over to Morgan Stanley. At present, DSP Merrill Lynch is the designated lead manager.

Though much of this is speculation, the buzz has created enough doubt in the mind of institutional investors over the course the stock would take from here. Local operators dealing in the stock argue that the Morgan Stanley report may not necessarily be a clear projection for the scrip. Some domestic brokerage outfits such as Dalal & Broacha and LKP Securities are recommending Zee as a good buy at lower levels over the long term.

At the viewership end, Star TV and the Big B, through their mega-successful Kaun Banega Crorepati (KBC), seem to be looming large over other players. Marketmen expect the KBC factor to eat into the advertising and viewership of rival channels, at least in the short term.

Meanwhile, even as KBC looks all set to steal the show, the Zee Telefilms counter will have a tough time finding buyers.

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