Buy Sun TV Network; target of Rs 865: ICICI Securities

ICICI Securities's research report on Sun TV Network

Ad revenue declined 6.4% YoY in Q3FY25 as there was a sharp cut in ad spends by FMCG companies in Nov’24 and Dec’24. Subscription grew 2% YoY, lower than our estimated 4% YoY, as pricing hikes by the company are taking time to implement. There were no movie releases/IPL revenues in the quarter; hence, revenue/ PAT declined 10.4% YoY/ 20% YoY. Q4FY25E is also likely to be muted given ad spends by brands may get diverted towards IPL. IPL starts from 21 Mar’25; therefore, attribution of IPL revenue in Q4FY25E will be less. However, FY26 is likely to see broad-based recovery in ad spends, as income tax cuts announced in India’s recent Union Budget should boost consumption. Sun has a cash balance of INR 75bn. Given its inexpensive valuations, we maintain BUY

Outlook

We believe, given Sun’s inexpensive valuations, the stock is likely to re-rate once there are signs of recovery in ad revenue; hence, we maintain BUY. We value the stock at a revised TP of INR 865 (vs. INR 1,111) based on ~18x 1-year forward (FY27E), as we cut our estimates and roll over by three months.