Zee Shares Witness 30% Crash Following Failed Sony Merger

Zee Entertainment shares plummet 30% in the wake of the failed Sony India merger, marking its most significant drop in five years. The market reacts with apprehension, triggering analysts to reassess targets and ratings amid uncertainties about Zee's future.
Zee Entertainment
Zee Entertainment

Shares of Zee Entertainment, one of India's leading entertainment companies, fell 10% to Rs 208.60 on the BSE in early morning trade  on January 23. The stock's  52-week high price is Rs 299.50. Its 52-week low is Rs 172.25.

Reason behind the Fall

Zee Entertainment
Zee Entertainment

Zee Entertainment faced a significant setback as its share price plummeted by 30% during intraday trade on the BSE, reaching a 52-week low of ₹162.25.

The drastic fall was triggered by the termination of the Zee-Sony merger deal, causing concern among investors about Zee's future growth and the overall valuation of its stock.

Commencing at ₹208.60, a sharp decline from the previous close of ₹231.75, Zee Entertainment's shares reached the new low of ₹162.25.

The current market capitalization is approximately ₹15,940 crore, reflecting a substantial decrease from the previous session's nearly ₹22,260 crore and a significant loss of approximately ₹6,320 crore in a single trading session.

The stock has already experienced a downturn of nearly 16% in January, and with today's low, the total loss for the month has surged to 41%.

This turn of events has raised uncertainties about Zee's market standing and its ability to recover from this setback in the immediate future.

Zee Entertainment
Sony Terminates Merger with Zee: Shakeup in Indian Media Landscape

Motilal Oswal's brokerage firm has downgraded Zee stock to neutral, revising the target price to Rs 200. In the short term, Zee's revenue is unlikely to recover. The potential merger with Sony could have enhanced its operations and led to brighter growth prospects. However, with the deal now off the table, those opportunities seem diminished. Zee appears to lack a clear business plan for long-term growth, raising concerns that investors need to consider.

Zee Entertainment
Zee Entertainment

Elara Capital has downgraded Zee and reduced the target price from Rs 340 to Rs 170, recommending selling in the stock. Zee missed a significant opportunity in the sports industry, as the potential tie-up with Sony could have boosted its commercial performance in the gaming sector. The brokerage highlights that if the stock hits another Rs 170, the target price could further decline towards Rs 130 in the next phase.

MK Global has also shifted from a buy to a sell stance, reducing the target price to Rs 175. Caution is advised for investors as Zee Entertainment shares are likely to face a decline in the upcoming trading days.

Data in this section is not a buy/sell recommendation but only a compilation of information on various technical/volume-based parameters

Analyst certifies that all of the views, if any, expressed in this report reflect his personal views about the subject company or companies and its or their securities, and no part of his compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report. Analyst affirms that there exists no conflict of interest that can bias his views in this report. The Analyst does not hold any share(s) in the company/ies discussed.

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