INSUBCONTINENT EXCLUSIVE:
Edelweiss Financial Services has a buy call on Sun TV Network with a target price of Rs 1,208.
The current market price of Sun TV Network is
Rs 786.25.
Time period given by the brokerage is one year when Sun TV Network price can reach the defined target
higher-than-expected IPL revenue
Key positives: (i) about 20 per cent YoY spurt in advertising, albeit on a negative base of -4.1 per cent; and (ii) about 15 per cent YoY
The second GEC in TN and entry into other regional markets such as Marathi and Bengali are key monitorables
growth in Q1FY19, albeit on a negative base of 4.1 per cent YoY
Share of Tamil market to the total ad revenues fell from the earlier 67 per cent to 60 per cent which in fact helps in reducing
concentration risk from 1 market
Management estimates double digit ad growth in FY19
Subscription income grew about 15 per cent YoY
Sun TV has signed a deal with Jio for its content on SUN NXT.
Q1FY19 conference call: Key takeaways - i) Sun TV is planning to re-position
Sun Life channel as its second GEC in Tamil; ii) the company expects to enter the Bengali market by the end of FY19 and break even soon in
the new channels; iii) it expects a lot of sponsorship opportunities as its IPL team is becoming popular; iv) Management believes it can
earn extra Rs 3bn to 5bn due to digitization in the Tamil Nadu market and v) Sun Nxt is in its early days and the company will share numbers
robust beat in Q1FY19 on all fronts, management salary being capped at FY18 levels and likely increase in dividend payout
Digitisation in Tamil Nadu is a key positive trigger
We retain the target multiple of 28x FY20E EPS that yields our TP of Rs 1,208
At CMP, the stock is trading at 19.2X FY20E EPS.
