Sun TV share falls 3% after Q2 profit slips to Rs 345 crore; CLSA, Nomura retain buy

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Sun TV Network share price was down 3 percent intraday on November 13 after the company reported a decline in Q2 profit.

The company's profit for the quarter ended September 30, 2020, declined 5.62 percent to Rs 345.91 crore from Rs 366.51 crore in the same quarter a year ago.

Revenue for the quarter was at Rs 756.16 crore as against Rs 773.93 crore in the year-ago. Total income for the quarter was Rs 807.71 crore as against Rs 846.07 crore a year ago.

Sun TV's subscription revenues for the quarter were up 14 percent at Rs 427.04 crore from Rs 375.65 crore for the corresponding quarter ended September 2019 while EBITDA for the quarter was up by 7.10 percent at Rs 502.03 crore from Rs 468.74 crore a year ago.

The stock was trading at Rs 429.55, down Rs 13.50, or 3.05 percent at 09:21 hours. It has touched an intraday high of Rs 444.40 and an intraday low of Rs 415.80.

Global research firm CLSA has maintained a buy call with a target of Rs 590 per share. It is of the view that the positive surprise has been led by 14 percent YoY growth in subscriptions and IPL revenue adding that TV content production has reached near normalcy, according to a CNBC-TV18 report.

CLSA feels that AD revenue and earnings growth is likely to return in FY22.

Japanese brokarage Nomura has also maintained buy on the stock with a target of Rs 583 per share. It is of the view that revenue/EBITDA was largely in-line with estimates. It is of the view that good traction was seen in AD spends in the festive season.

Despite the competition, the company has been able to hold on its share in the Tamil genre. New shows and higher spends from regional advertisers should drive AD recovery. The brokerage firm has maintained its AD growth forecast of -20 percent in FY21 and +19 percent/8 percent in FY22/23.

Nomura expects subscription growth to moderate to 6 percent/5 percent over FY22/23 and has revised FY21-23 revenue estimates by -2 percent/4 percent/1 percent and EPS by 5 percent/4 percent/0 percent adding that a buyback could act as a re-rating catalyst.

Disclaimer: The views and investment tips expressed by investment experts 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.