Invesco Oppenheimer’s proposal to oust Punit Goenka and few other directors of Zee Entertainment’s board by calling an extraordinary general meeting came as music to the ears for investors who have had reservations about the current board’s ability to ride the company out of its current rut.
If Invesco’s proposals receive the majority of the shareholders’ approval, then analysts believe it would finally put to bed concerns over corporate governance and capital allocation at a company that has an impeccable fundamental business with near zero debt.
To be sure, though, it will be foolhardy to assume that the buyers of the company’s stock today were all long-term investors betting on a sweet future. Delivery volumes in the stock today were 33 per cent, lower than the five-day average of 47 per cent and three-month average of 56 per cent, suggesting that a large part of today’s rise was thanks to short-selling and speculative intraday buying.
Nonetheless, there is hope in the air for the investors of the broadcasting giant that needs little tweaks here and there to start working at optimal level.
Hope swells anew
Well, Zee Entertainment wasn’t the only giant of yesteryear where there was hope burgeoning. Vodafone Idea’s investors also had cause for enthusiasm after a media report said that the government is working on relief measures that may include a moratorium on spectrum dues for four years.
On top of the moratorium, the government may also look at reworking the formula for calculating adjusted gross revenues in the future that will be limited to only income via telecom services. Further, the report showed that the government may give options to companies to convert the interest on past AGR dues into equity stake.
If these measures do see the light of the day, then Vodafone Idea could be in with a chance to survive and not be sent to the bankruptcy guillotine as reflected in the stock’s 10 per cent rise. But hope sometimes is a dangerous thing, and Vodafone Idea investors know that all too well.
Hope diminishes
Amid the raucous enthusiasm on the counter of Zee Entertainment and Vodafone Idea, there was tension at a new-age giant Zomato. One of the country’s largest online food aggregators today said that its co-founder and head of supplies Gaurav Gupta has resigned.
The development came as a sucker punch to investors given that prior to the news, the stock was trading nearly 8 per cent higher. In the knee-jerk reaction that followed, the stock erased its earlier gains and tanked nearly 5 per cent.
However, shareholders took the bad news in their stride on the perception that the exit of the chief operating officer may not have much bearing on the future growth of the company. What should concern investors though is the failed attempt of Zomato in the nutraceuticals space, which raises concerns over analysts’ optimism for the company capitalizing on adjacencies in its business.
