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At least five brokerages said investors should sell Zee Entertainment's stock as the Indian broadcaster's failed $10 billion merger deal with Sony India raised concerns about its survival in an increasingly competitive industry.

The collapse of the two-year-long talks on Monday to create one of India's biggest TV broadcasters creates more uncertainty for cash-strapped Zee, in particular with Disney seeking to merge its Indian businesses with the media assets of billionaire Mukesh Ambani's Reliance.

Brokerage Emkay Global said Zee "going it alone" is a low-probability event and believes the company will attract other suitors. It also said the failed deal could spur shareholder activism against Zee's management.

While neither Japan's Sony nor Zee elaborated on Monday on the unfulfilled conditions that led to the deal's collapse, a stalemate over who would lead the combined company had put the merger in danger.

Emkay downgraded Zee's stock to "sell," as did four other brokerages, according to LSEG data. The average rating of the 19 analysts covering Zee has dropped to "hold" from "buy," while their median price target has tumbled 16% to 253 rupees.

Zee's stock closed at 231.40 rupees on Saturday. They have lost about 8% since the merger was announced in September 2021 and have tumbled 16% so far in 2024 on concerns about the deal.

CLSA double-downgraded Zee to "sell" from "buy" and slashed its target price by 34%, estimating the stock's price-to-earnings ratio, a key valuation metric, will from 18x currently to the 12x-levels when the merger was announced. ($1 = 83.0860 Indian rupees)