Buy Sun TV; target of Rs 575: Dolat Capital

Dolat Capital's research report on Sun TV

Sun TV’s (SUTV) Q1FY21 was healthy led by 18/11% YoY/QoQ growth in subscription revenue. Outlook remains upbeat with guidance for double-digit subscription revenue growth in FY21/FY22. This is in spite of potential negative impact if any from NTO 2.0. We remain conservative in our estimates. Acceleration of investments in digital business from future-proofing perspective was key highlight. But, there had been disconnect and delays in intent and execution. Thus delivery would be crucial. Management expect to maintain FY20 PAT in FY21. We believe this is feasible. Ad revenue de-growth of 67% YoY (Q1FY20 –xx%) despite market share gains in trailing 6-9 months was a disappointment.

Outlook

SUTV is currently trading at an attractive 13/10.5x FY21/22E EPS with attractive dividend yield of ~4% with strong BS (C&CE at ~19% of Mcap) and leadership position in Southern markets. BUY with TP of Rs 575 @ 14x Jun-22E EPS.