The shares of Zee Entertainment Enterprises Ltd on Tuesday plummeted nearly 33 per cent to notch its biggest single-day fall ever after Sony terminated a $10 billion merger deal and brokerages downgraded the stock.
As a result of the sell-off, the market capitalisation of the media and entertainment firm nosedived Rs 7,285.53 crore to Rs 14,974.50 crore on the BSE.
The shares first fell 10 per cent, and circuit filters were subsequently revised downwards by the exchanges.
On the BSE, the Zee share tanked 32.73 per cent to close at Rs 155.90, while it crashed 30.47 per cent to settle at Rs 160.90 on the NSE.
During intra-day trades, the Zee scrip touched its 52-week low of Rs 152.50 on both the BSE and NSE.
In volume terms, nearly 1.46 crore equity shares were traded on the BSE, while 22.84 crore shares were traded on the NSE.
Market circles said the counter could fall further and investors should not attempt bargain hunting.
The development saw brokerages like CLSA downgrading the stock to sell from buy.
Elara also downgraded the stock to a sell, while Nuvama cut it to reduce.
Motilal Oswal also downgraded the stock to neutral with a target price of Rs 200. Analysts said the breakup of the deal increases the challenge before Zee.
``Zee is operationally facing lot many challenges in the form of subdued advertising business, depleting viewership share in its key markets like Hindi GEC, Tamil and Marathi markets. It is also seeing competitive pricing in subscription business and slow growing OTT business with competition from the biggies,’’’ Ashwin Patil, senior research analyst at LKP Securities said.
Goenka a target
Zee chief executive officer and MD Punit Goenka is under intense pressure following the collapse of the Sony deal.
Speculations are rife that more institutional shareholders may join the likes of Life Insurance Corporation (LIC) in moving a resolution against him.
This comes as they stare at a big drop in the value of their investments.
The investors are engaged in the process of arriving at a common ground, and it is learnt that even overseas institutions could be lined up against Goenka.
The investors are reportedly engaging with one proxy advisory firm to co-ordinate joint action.
Zee on its part has said that it had taken all efforts and steps in line with the merger agreement and had consistently worked towards the implementation of the deal.
Sony is seeking $90 million as break-up fees for violating the terms of the merger pact and “invoking arbitration”, which Zee said it will contest legally.
On the other hand Zee said it has spent Rs 366.59 crore on compliances till September 2023 for its merger with Sony.
The company spent Rs 176.20 crore in the financial year that ended in March 2023. Besides, it spent Rs 190.39 crore in the first six months of the current fiscal.
