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After remaining in a bear grip since February, the shares of Sun TV Network rose sharply on Monday, thanks to a strong quarterly financial performance. Post results, many analysts turned positive on the stock.
The stock of Sun TV jumped to the day’s high of ₹977.8, before settling at ₹963.25, still a strong gain of about 11 per cent, on the NSE. Almost five lakh shares were added in open interest, (8.6 per cent), signalling bullish bets.
The Chennai-based broadcaster on Friday reported a 23 per cent rise in net profit at ₹289.79 crore (₹235.91 crore). Total income jumped 21.6 per cent to ₹753.79 crore (₹619.85 crore).
Following the company’s results, most analysts raised their price targets citing improvement in the outlook on advertisement revenue and subscriptions from digitisation, especially in Tamil Nadu.
Centrum Broking expects subscription revenues to grow at a healthy pace. “As the company starts to convert sponsored programming to commissioned programming, we expect the ad volumes to grow steadily, while entry into new regional market would aid growth,” it added. The brokerage house continues to maintain a ‘buy’ call on the stock with a price target of ₹1,170.
According to Motilal Oswal, domestic subscription revenue at a CAGR of 17 per cent over FY18-20, is primarily led by higher ARPU, largely due to digitisation of nearly one crore analogue subscribers. Ad revenue should witness strong momentum, led by healthy ad outlook, steady shift to the commission model in the TN market and consistent and healthy viewership share, it added. The brokerage house recommends a ‘buy’ on the stock with a price target of ₹1,200.
Edelweiss expects double-digit growth in advertisement revenue to continue in 2018-19 (April-March) and 2019-20, with revenues from Indian Premier League providing an additional leg-up.
Kotak Securities, though upgraded the stock to ‘accumulate’ from ‘reduce’, remains cautious on valuations, due to deteriorating competitive position of the company in its key geographies.
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