Motilal Oswal's research report on Sun TV Network
Sun TV Network (SUNTV) reported a weak 3QFY25 on all counts. Revenue/ EBITDA declined 10%/25% YoY due to continued weakness in ad revenue (-14% YoY, vs. -8% YoY for Zee) and higher production costs. Recovery in ad revenue remains the key near-term monitorable. However, we continue to believe that the Star-Viacom merger is a potential double whammy for SUNTV due to: 1) higher competition from the deeppocketed player for ad revenue in the core business, and 2) a potential downward revision in IPL media rights in the next renewal cycle (from FY28), which would severely impact the valuation for SUNTV’s IPL franchise (SRH).
Outlook
We value SUNTV on SoTP; we assign 6x FY27 EV/sales for the Sports franchise, 6x EV/EBITDA for the core TV business, 1x for cash holding, and potential dividends of INR103b to arrive at our revised TP of INR650 (implying ~13x FY27 P/E). We maintain our Neutral rating on the stock.
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