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Feb 13, 2012, 04.05 PM IST
PINC Research is bullish on Sun TV Network and has recommended accumulate rating on the stock with a target of Rs 366 in its February 10, 2012 research report.
“Sun TV Network, Net sales de-grew 29%YoY to Rs4.25bn (5.8% de-growth QoQ) lower than our estimate of Rs4.5bn. Ad revenue de-grew 6.5% YoY(4% growth QoQ). Subscription revenue declined 8.1%YoY (de-growth of 10.3% QoQ) to Rs1.13bn led by decline in cable revenue 45.3%YoY (38% QoQ), DTH revenue grew 20%YoY. Overseas business registered strong growth of 20%YoY(33% de-growth QoQ) to Rs240mn. EBIT margin dipped 100bps to 54% from 55% in Q3FY11.”
“The company's revenue de-grew 29%YoY to Rs4.25bn on account of higher base in Q3FY11 led by revenue from the movie Endhiran (Rs1.5bn in Q3FY11). Excluding revenues from Endhiran, the topline de-grew 5% due to a sluggish ad environment. Ad revenue declined 6.5%YoY to Rs2.44bn. Subscription revenue decreased 8%YoY to Rs1.13mn was mainly due to pressure on cable revenue i.e decline of 45.3% YoY and 38.3% QoQ. Negotiation talks are still on with ARASU cable for distribution of Sun TV's channels. DTH segment registered healthy growth of 20% YoY (6.3% QoQ) to Rs840mn with DTH subscriber base of 7.43mn (2% growth QoQ). Overseas revenue increased 20%YoY to Rs240mn and broadcasting fee declined 2%YoY to Rs410mn. Movies business saw no major contribution with no movies released in the quarter.”
“EBITDA margin was at 80.2%. Factoring deprecation of Rs 250mn and amortization of Rs870mn, EBIT margins also were slightly lower at 54% from 55% in Q3FY11. Margins saw support from lower expenditure which declined 13%YoY on account of reduced employee expenses and other expenses. PAT declined 25.5% YoY to Rs 1.68bn with lower NPM of 39.5%. The company has declared interim dividend of Rs2.5 resulting in total dividend of Rs8.75 (annualised dividend yield of 3.4%). The stock is currently trading at 15.8x its FY13E earnings estimates. We increase the FY13 earnings multiple on the stock to 17x (earlier 16x) to reflect the time value. However, given the recent appreciation in the stock and limited upside, we downgrade the stock to 'ACCUMULATE' with a target price of Rs366 (earlier Rs340),” says PINC Research report.
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