“Underlying operating performance was 3% lower than estimates while robust performance in IPL led to the beat. IPL Revenue/EBITDA was 41%/55% higher than estimates. Ex-IPL EBITDA was down by 3% and EBIT was lower by 8%, impacted by higher amortization expenses,” analysts at Emkay Global Financial Services said in result update.
Domestic Subscription growth was impacted by a higher base but the management stated that Tamil Nadu (TN) digitation momentum remains robust. Ad growth in the medium term will be aided by new channel launches (Bengali, Marathi and repositioning of Sun Life); the brokerage firm said with maintains ‘hold’ rating on the stock and target price of Rs 869.
Sun TV’s operating performance came well ahead of expectations, led by the strong performance of its IPL franchise. The stock has corrected around 22% CYTD on the back of concerns over rising competition in core markets and market expansion, exerting pressure on margins, according to analysts at SBICAP Securities.
“However, post correction, we find valuations attractive; the strong performance of the IPL franchise and promoters’ intentions to cap their salary in FY19 at FY18 levels (~Rs1.8bn) will largely negate any pressure on margins from investment into new markets,” the brokerage firm said with upgrade to BUY rating on the stock and a target price of Rs 1,030.
At 12:45 pm; Sun TV Network was trading 5.5% lower at Rs 783 against 0.34% decline in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined 4.68 million equity shares changed hands on the BSE and NSE so far.