ICICI Direct recommended hold rating on Sun TV with a target price of Rs 675 in its research report dated November 05, 2018.
ICICI Direct's research report on Sun TV
Revenues came in at Rs 749.6 crore (up 10.9% YoY), lower than our estimate of Rs 763 crore. The miss was owing to advertisement revenues, which witnessed 3.7% YoY growth vs. our estimate of 14% YoY growth). Subscription revenues came in at Rs 339.79 crore (21.3% YoY growth), much ahead of our estimate of 15.3% YoY growth, on account of continued benefits of Tamil Nadu digitisation EBITDA came in at Rs 554.3 crore, up 11.7% YoY, marginally below our expectations of Rs 561.4 crore largely owing to lower topline. Margins at 73.9% were higher than our estimate of 73.5% The company reported profit of Rs 351.3 crore (vs. Rs 303.1 crore) on account of lower depreciation and higher other income The company has declared an interim dividend of Rs 2.5 per share, in addition to Rs 5 per share interim dividend declared during Q1FY19.
Given the sharp competitive intensity in the key market, and volatility on account of movie business, we downgrade the stock to HOLD recommendation. We cut our target multiple further to 18x vs. 23x earlier and value the company at Rs 675/share.
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