Broadcasting firm Sun TV Network on Friday reported a 23% year-on-year (Y-o-Y) increase in standalone net profit at Rs 3.51 billion for Q2FY19, against Rs 2.85 billion in the same period last year. Revenue grew by 10.9% YoY to Rs 7.50 billion, lower than the average analyst estimates of Rs 7.63 billion. EBITDA (earnings before interest, tax, depreciation and amortization) margin expanded 50bps YoY to 73.9%.
The stock has corrected around 37% thus far in the current calendar year 2018 on the back of concerns over the shift in viewership towards Over-the-Top (OTT) and perceived under-investments in OTT, rising competition in core markets, and pressure on margin with expansion into newer markets. In comparison, the S&P BSE Sensex was up 3% during the period.
Analysts at SBICAP Securities believe strong performance of the IPL franchise, and promoters’ intentions to cap their salary in FY19 at FY18 levels (around Rs1.8 billion) will largely negate any pressure on margins from investment into new markets and Sun NXT. Steady cash generation, likely higher payout, and strong earnings growth will drive valuation higher.
At 09:58 am; Sun TV Network was trading at Rs 624, down 6% on the BSE, as compared to 0.16% decline in the S&P BSE Sensex. A combined 1.69 million equity shares changed hands on the counter on the BSE and NSE so far.