What next for Zee? Why does it get a SELL recommendation from Emkay?

Zee's planned merger with Sony India has been canceled. Sony sent a letter ending the deal, stopping a process that had been going on for over two years.

This happened even though Punit Goenka, Zee's leader, was ready to leave his role in the new company, according to an Emkay Research report

"We previously mentioned that this failure would harm both Zee and Sony, especially because they are competing with a larger company like Reliance-Disney. This cancellation might lead to a legal fight between Zee and Sony, as suggested in their statements," said the report.

"This issue could also make Zee's shareholders challenge the company's management. Zee might start looking for other companies to make deals with. We now advise selling Zee's stock instead of buying it, as the company faces tough competition and has internal issues. Based on our future earnings estimate, we've lowered our target price for Zee's stock from Rs 315 to Rs 175," said Emkay in its report.

Read the Emkay Research report here.