Unlocking Of Fii Limit Lifts Zee Tele

The Zee Telefilms stock rose more than 14 per cent in intra-day deals following the Reserve Bank of India decision to raise the ceiling on foreign fund ownership in the company to 49 per cent from the earlier limit of 30 per cent.

The scrip which opened at Rs 137, went up to a high of Rs 154.75 and closed the day's trading at Rs 147.95, around 9.2 per cent higher compared with its previous close. More than 56 lakh shares were traded on the Bombay Stock Exchange (BSE) today.

Commenting on the hike in FII limit, Hitesh Vakil, the chief financial officer of Zee Telefilms, said, "We see this as a good move as the FIIs will now be free to pick stakes in the company which earlier they could not do. The entire exercise of raising the FII limit is also to make it more investor friendly."

 

A senior media analyst from a foreign brokerage said, " The lifting of foreign holding limit is good. We were expecting this announcement to come this week. FII limit had earlier been exhausted and that could be the reason for the correction in the stock. The stock had corrected by about 20-25 per cent when the foreign limit was hit. Thus, now with RBI allowing the FII to buy upto 49 per cent, fresh fund buying is likely to help the stock see upsides in the short term."

"This will also increase Zee's weight in the MSCI Index in the next recast that will happen sometime in August," he added.

A RBI statement said, "Foreign institutional investors can now purchase equity shares and convertible debentures of Zee Telefilms up to 49 per cent of its paid-up capital through primary and secondary markets." It also noted that the company's board had approved raising the ceiling for foreign fund ownership to 49 per cent.

Market watchers said that another reason for the interest in the stock is rumours of private placement which is expected to be made at a significant premium.