In Tuesday's trading, ZED Entertainment Enterprises Ltd. (ZED) shares plunged and experienced numerous downward circuits as broking companies reduced their target prices by up to 50% and were overtly pessimistic on the stock in the wake of the Sony India contract termination. ZED shares dropped 29.98% to a low of Rs 162.25 on the BSE, from a closing value of Rs 231.75 on Friday. This was the stock's most recent 52-week low level; on December 12, it reached a 52-week high of Rs. 299.50. The stock's new analyst targets remained within the Rs 170-200 area.
There were large volumes of sales. By 12.20 pm, 10,52,31,549 ZED shares valued at Rs 1,761 crore had changed hands. High volume and a sharp decline in the stock price indicate pessimistic sentiment on the counter.
ZED stated in a filing to the BSE that, in spite of multiple good-faith discussions, the parties were unable to reach an agreement over the outstanding conditions precedent that necessitated action from both Culver Max, BEPL and ZED in accordance with the MCA's terms. According to ZED, MD and CEO Punit Goenka consented to resign in order to support the merger.
Motilal Oswal recommended a target price of Rs 200 and downgraded the stock to "Neutral." Since it is unclear what direction Zed will go in the future and the long-term prospects of the company are not entirely clear, this brokerage feels that a recovery in ZED profitability is unlikely in the near future. With the rumored combination of Reliance and Disney Star, CLSA feared that competition may heat up and lowered its price objective for ZED from Rs 300 to Rs 198.
The primary factor in the valuation increase during the previous two years was the merger with Sony. However, we lower ZED to Sell due to the termination, with a revised March 2025E objective of Rs 170 from Rs 340. However, the target price can increase to Rs 130 if the Disney deal is upheld. Another strategic or financial partner purchasing the majority of Zee's shares could give the value multiple some relief, according to Elara.
"We think this breakdown can also spur shareholder activism against the ZED management," stated Emky Global. Furthermore, we believe that ZED Entertainment Enterprises Ltd will now attract more bidders for possible agreements. Because of the stock's poor competitive posture and escalating corporate governance concerns, we currently lower it from Buy to SELL (from Buy). We reduced our goal from Rs 315 to Rs 175 at eight times the Dec. 25E SA broadcasting Ebitda."
