Sun TV stock plummets over 10% on weak Q1 print, brokerage downgrades

Sun TV shares have risen over 15 percent this year

Sun TV Network shares plummeted over 10 percent to Rs 823 each on August 12, following a disappointing April-June quarter (Q1FY25) performance. Brokerages expressed their dissatisfaction with the results, downgrading the stock due to high valuations and concerns over future earnings potential.

Kotak Institutional Equities downgraded Sun TV from 'add' to 'sell,' setting a target price of Rs 830 per share. They highlighted the stock's steep valuation amid increasing risks from OTT platforms and potential industry consolidation. "Given the sharp rise in the stock, the core TV business is now trading at 12X September 2026E earnings, after accounting for ~Rs 9,100 crore valuation for the IPL team and excluding ~Rs 8,550 crore in cash (September 2025E)," they noted.

Motilal Oswal analysts also downgraded Sun TV, moving from 'buy' to 'neutral,' with a target price of Rs 860 per share. "We have reduced our EBITDA estimates by 10 percent for both FY25 and FY26E due to slower ad revenue recovery and increased content costs associated with the launch of the new Hindi channel, SunNeo. We anticipate a revenue and PAT CAGR of 3 percent over FY24-26," the analysts stated.

ALSO READ: Sun TV Q1 profit falls 5.4% to Rs 560 cr, revenue dips to Rs 1,312.40 cr

Sun TV's core business underperformed in Q1, with ad and subscription revenues dropping 5 percent and 2 percent YoY, respectively, due to the impact of cricket and general elections. Consequently, the company's net profit declined by 6 percent YoY in Q1FY25, with revenue from operations down 3.1 percent YoY.

On the operational front, the company's EBITDA fell 9.9 percent YoY in Q1FY25, with EBITDA margins shrinking sharply by 430 basis points YoY to 54.8 percent.

Despite these challenges, Sun TV shares have risen over 15 percent this year, outperforming the Nifty 50's 12 percent gain during the same period.

On August 12 at 1:55 pm, the stock was down 9.66 percent trading at Rs 826.15 apiece.

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