Zee shares plunge after Sony India merger fails, analysts recommend sale By Reuters
© Reuters. FILE PHOTO: The Zee Entertainment logo is visible in this picture taken September 1, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
BENGALURU (Reuters) – Shares of Zee Entertainment (NS:) plunged 10% on Tuesday, the biggest one-day decline since April 2021. sony (NYSE:) India has canceled its $10 billion merger with an Indian broadcaster, raising concerns about its survival in an increasingly competitive industry.
At least five brokerages said investors should sell shares of Zee and cut their price targets significantly for the stock, according to LSEG data.
Shares of Zee were last traded at ₹208.30, their lowest since mid-July 2023. They have already lost about 8% since the merger was announced in September 2021, and are down 16% so far in 2024 due to concerns about the deal.
Two years of talks to create one of India’s largest TV broadcasters broke down on Monday, creating further uncertainty for cash-strapped Zee. This is especially true as Disney seeks to merge its India operations with the media assets of billionaire Mukesh Ambani’s Reliance.
Brokerage Emkay Global said Zee “going it alone” was an unlikely event and believed the company would attract other suitors. However, he warned that the failed deal could trigger shareholder action against Zee management.
Neither Japan’s Sony Group nor Zee elaborated on Monday about the unmet conditions that led to the deal collapsing, but the deadlock over who will lead the merged company puts the merger in jeopardy.
Emkay, along with four other brokerages, downgraded Zee’s stock to a ‘sell’ rating, LSEG data showed. The average rating of 19 analysts covering Zee fell from “buy” to “hold”, with the median price target falling 16% to ₹253.
CLSA doubled down Zee from “buy” to “sell” and cut its price target by 34%. Through this, it was estimated that the stock’s price-to-earnings ratio, a key evaluation indicator, would increase from the current 18x to 12x at the time of the merger. announced.
($1 = 83.1080 Indian Rupees)
