Motilal Oswal is bullish on Sun TV Network has recommended buy rating on the stock with a target price of Rs 690 in its research report dated May 23, 2019.
Motilal Oswal's research report on Sun TV Network
Movies and IPL revenues cushion TV business: SUNTV reported a weak quarter due to muted ad/subscription revenue growth. Standalone revenue growth came in at strong 24% YoY to INR8.9b (9% beat), primarily due to revenue from movies (INR1.1b) and the IPL (INR0.6b). Consequently, EBITDA grew 16% YoY to INR6.1b (3% beat); margins, however, contracted 440bp YoY to 68.4% impacted by high production cost and IPL related increase in SG&A. But, movie amortization cost pulled down PAT to INR2.8b, -2% YoY (23% miss). For FY19, revenue/EBITDA/PAT grew 28%/31%/28%.
We have lowered our TP to INR690 (prior: INR740), ascribing 15x (~30% discount to three-year average) to FY21 EPS. We believe, till the time the flux gets settled, impact from TRAI's tariff order along with mounting pressure on viewership share and margins, warrants a discount to the average multiple. Yet, the current price largely captures the negatives. Maintain Buy.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.