Zee Entertainment shares rebounded by over 8% on Thursday after the stock’s unprecedented crash a day ago, where the stock recorded its worst single-day session following the collapse of its merger with Sony’s India arm.

What Happened: This resurgence was likely fuelled by expectations that Zee will attract new suitors for potential deals after the cancellation of the proposed merger. Since the termination of the Sony deal, Zee’s stock has faced de-ratings and “sell” calls from brokerages, with multiple risks looming.

Brokerages Still Bearish: Kotak Equities downgraded the stock to a sell rating from reduce, citing concerns about pending investigations, weak operating performance, and significant EPS estimate downside risks.

Zee faces several operational challenges such as a subdued advertising business, declining viewership share in key markets, competitive pricing in the subscription business and slow growth in the over-the-top (OTT) sector.

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Emkay Global highlighted the potential vulnerability of Zee in the industry following the failed Sony deal and the potential Reliance-Disney merger. The brokerage reduced estimates for Zee’s FY24-26 standalone EBITDA and revised its target price due to slower recovery, absence of sporting revenues, and increased content investments.

CLSA adjusted its target price to ₹198, anticipating a de-rating of Zee’s valuation to pre-Sony merger levels. Zee’s muted growth performance in the last two years, coupled with challenges in the OTT and linear TV segments, contribute to the complex landscape facing the media company.

Price Action: Zee Entertainment’s share price was up 8.37% at ₹169 in afternoon trade on Thursday.