Comments
Target: ₹750
CMP: ₹621.20
Sun TV Network’s EBITDA remained flat y-o-y at ₹570 crore (in line) with margins contracting 200bps y-o-y, dragged by higher operating expenses and soft revenue growth. Revenue grew 3.3 per cent y-o-y to ₹890 crore (in line), exhibiting some moderation. This is primarily attributed to weakened ad revenues, stemming from the impact of cricket World Cup.
The prolonged weakness in ad revenues has affected the top-line growth. The recovery of ad spends, particularly evident in the FMCG segment, will remain a key monitorable for the stock. The company’s ongoing conservative approach toward investments in OTT, prioritizing movie production and monetizing its existing library, poses a key risk within the fast-growing OTT space.
SUNTV’s healthy liquidity and a cash balance of INR4.9b as on Mar’23 offers room to intensify investments within the linear and hyper competitive OTT space. This, along with a healthy dividend payout potential and a reasonable valuation, offer support to the stock.
We expect a revenue/PAT CAGR of 8%/8% over FY23-25, building in gradual recovery within the ad revenues and continued momentum within the subscription revenues.
We value the stock at 15x FY25E P/E on FY26 basis to arrive at our TP of ₹750.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.