Amid experiences of a $241-m accounting difficulty, Zee shares tumble 15%

Shares of Zee Leisure Enterprises tumbled 15 per cent on Wednesday after Bloomberg reported that Securities and Exchanges Board of India (SEBI) had discovered a $241 million accounting difficulty within the firm’s funds. The experiences recommend that SEBI’s preliminary findings present that the quantity had been diverted out of Zee’s books and Zee promoters had been referred to as in for questioning by SEBI. 

This quantity was 10 instances larger than the investigators had initially investigated, per experiences. 

Nevertheless, later, the corporate spokesperson clarified that the experiences associated to accounting points are “incorrect and false”.

Hours after the report, Zee inventory value tumbled by 10 per cent on the bourses on Wednesday. The inventory closed 14.77 per cent decrease at ₹164.50 in opposition to its earlier day’s closing. Zee inventory value has fallen by almost 18 per cent since Sony introduced its plans to terminate merger deal on January 22.

A Zee spokesperson mentioned, “The experiences and rumours pertaining to accounting points within the firm are incorrect and false. Pursuant to the Securities Appellate Tribunal (SAT) order, which granted reduction to the present Key Managerial Personnel (KMP), the corporate has been within the strategy of offering all of the feedback, data or rationalization requested by SEBI, and has prolonged full co-operation on all points.”

Merger gone kaput

Zee and Sony have been at odds concerning the merger since August 2023, when SEBI issued its first allegations of Promoter and CEO Punit Goenka and Subhash Chandra misappropriating funds from the media agency. 

Following the SEBI investigation, Sony sought to oust Goenka from the place of the CEO and MD of the merged agency. On January 22, Sony scuttled the deal following a protracted stalemate on the merger between the 2 companies. 

On Tuesday, Zee shares rose by eight per cent amid experiences that Zee and Sony Footage Networks (India) are working to salvage their $10-billion merger. This report was additionally denied by Zee stating that no such negotiations are going down.

Although ZEEL is actively implementing measures to revive the enterprise and effectively run enterprise operations as a stand-alone entity, considerations round weak monetary positioning, company governance, and litigation outcomes proceed to stay, mentioned Keynote Capital. “Owing to the above, we proceed to use a big low cost (25 per cent now versus 30 per cent earlier) to ZEEL’s 5-year median PE. Due to this fact, based mostly on our revised estimates, we downgrade our score on ZEEL from Impartial to Cut back with a goal value of ₹176 (~18x FY25E earnings),” the home brokerage home mentioned.