Zee Entertainment hits over four-year low; tanks 52% thus far in CY 2024

Shares of Zee Entertainment Enterprises (ZEEL) were reeling under selling pressure for a second straight day on Tuesday, hitting an over four-year low of Rs 132.55. The stock fell 3 per cent on the BSE in today's intraday trade amid heavy volumes.

The stock of  the TV broadcasting & software production company was trading at its lowest level since April 2020. In the past two trading days, the stock price has slipped 7 per cent, while in the past one month, it has dipped 12 per cent. Besides, thus far in calendar year 2024 (CY 2024), the stock price of Zee has more-than-halved, tanking 52 per cent from a level of Rs 274.65.

At 02:03 PM, Zee was down 1.5 per cent at Rs 134.60 as compared to 0.5 per cent decline in the S&P BSE Sensex. Average trading volume on the counter nearly doubled with a combined 23.39 million equity shares changing hands on the NSE and BSE till the time of writing of this report.

Analysts at Emkay Global Financial Services said Zee’s near-term performance is likely to further deteriorate from current levels as it implements measures to achieve its FY26 targets. Zee5, which has been driving down margins of the entire company, can possibly be impacted and see some slowdown in revenue as the focus now shifts more toward reducing the losses.

"Meanwhile, the company's legal woes continue with regards to the merger-related case with Sony, its tussle for cricket rights with Disney Star, and Punit Goenka's ongoing Sebi case. Any unfavorable decisions against the company could cause further pain and derailment of current plans, in our view," the brokerage firm said in a company update.

Analysts believe the company is up against a tough business environment currently, and particularly with it competing against the larger entity of Disney- Reliance combined. Also, the company has now withdrawn its merger implementation application filed before the NCLT, to pursue growth and strategic opportunities.

"In our view, emergence of a new partner/buyer would be a key trigger for a stock re-rating. The stock is currently trading at its lowest valuation since the last 10 years (on 1YF EV/ Ebitda basis), which is a clear sign of the tight spot it is in. The stock price has sharply corrected since the merger break off, and could continue to languish given lack of triggers in the near term, in our view," Emkay Global said.