Shares of Zee Entertainment Enterprises Ltd climbed nearly 7 per cent on Wednesday after reporting their biggest single-day drop during the previous session. The stock today rose 6.70 per cent to settle at Rs 166.35. Yesterday, it had crashed 32.73 per cent on termination of $10 billion merger agreement by Japan’s Sony Pictures.
Rumours of AMG (Media Networks) interested in picking up a stake in Zee is likely behind the rebound in share price today, Vinit Bolinjkar, Head of Research at Ventura Securities told Business Today TV. When asked if one should enter at current levels, he said, “The stock is in a tricky play. So, I would let it go.”
Zee, in a post-market hours BSE filing, said it has called on Sony Group to withdraw the Japanese company’s termination of a $10 billion merger. The media company also mentioned that it has approached the Singapore International Arbitration Centre and the National Company Law Tribunal (NCLT) in relation with the matter.
Sony and Zee officially called off the planned media merger after two years of drama and delay, abandoning their effort to create an entertainment giant in Asia’s biggest streaming market.
Following the development, multiple brokerages cut their estimates and price targets on Zee. Brokerage Emkay Global said Zee “going it alone” is a low-probability event and believes the company will attract other suitors. It also said the failed deal could spur shareholder activism against Zee’s management.
CLSA double-downgraded Zee to ‘sell’ from ‘buy’ and slashed its target price by 34 per cent, estimating the stock’s price-to-earnings ratio, a key valuation metric, will from 18x currently to the 12x-levels when the merger was announced.
Sony Group Corporation-owned Culver Max Entertainment today said it will purse “organic and inorganic possibilities” to boost its presence in India post the collapse of the $10 billion merger deal with Zee.
On BSE, around 63.75 lakh Zee shares changed hands today. The figure was higher than the two-week average volume of 28.95 shares. Turnover on the counter came at Rs 104.94 crore, commanding a market capitalisation (m-cap) of Rs 15,978.24 crore.
The stock was seen trading lower than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-day and 200-day simple moving averages (SMAs). The counter’s 14-day relative strength index (RSI) came at 23.59. A level below 30 is defined as oversold while a value above 70 is considered overbought.
The company’s stock has a negative price-to-equity (P/E) ratio of 124.31 against a price-to-book (P/B) value of 1.52.
As of December 2023, promoters held just 3.99 per cent stake in the media firm.
(Disclaimer: Business Today provides stock market news for informational purposes only and that should not be construed as investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.)
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