Neutral Sun TV Network; target of Rs 580: Motilal Oswal

Neutral

Motilal Oswal's research report on Sun TV Network

SUNTV reported yet another weak quarter, with ad revenue declining 12% YoY (vs. -10% for Zee) amid weak consumer sentiment and cutbacks in ad spends on linear TV from the FMCG players. Reported revenue benefitted from the shift in SA T20 by one week into 3Q. However, profitability remained under pressure as EBITDA/adj. PAT declined 5%/8% YoY due to margin contraction of ~495bp YoY and lower other income.

Outlook

We value SUNTV on an SoTP basis: 9x FY28 EV/sales for cricket franchises (SRH), ~4x EV/EBITDA for the core TV business, 0.5x investments for Northern Superchargers, and 1x for cash/dividends (~INR 81b or INR206/sh), for our revised TP of INR580 (implies ~13x FY28E P/E). We maintain our Neutral rating.

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