FREE

MOSL: Morning India (14/February/18): 1. Financials; 2. SUN TV; 3. Hexaware Tech; 4. Ecoscope; 5. GAIL; 6. Motherson Sumi; 7. Britannia Inds

MOrning India (14/February/18): 1. Financials; 2. SUN TV; 3. Hexaware Tech; 4. Ecoscope; 5. GAIL; 6. Motherson Sumi; 7. Britannia Inds; 8. Marico; 9. NHPC; 10. GSK Consumer

 

Today’s top research idea

Sun TV - Revenue growth set to take off; Digitization gains accruing, finally

• Subscription revenues are likely to grow at 16% CAGR over FY18-20, led by digitization in Tamil Nadu. There is further upside driven by higher market share of DTH players, growth in MSO-led subscription revenue following TRAI’s tariff order, rising HD penetration and ARPU increase.
• Higher viewership led by content rejig, shift to commission model should help capitalize on potential ad revenue growth. Given the low base of FY17, we expect 14% CAGR over FY18-20.
• Near doubling of IPL revenue to INR2.8b bodes well. Moderate movie investments should lead RoCE to reach ~33% by FY20.
• We believe SUNTV is well poised to witness standalone revenue/PAT CAGR of 16%/24% over FY18-20. Healthy RoE of 33% and steady FCF generation should continue to offer strong upside, valuing at 30x December 2019E EPS (~15% discount to ZEEL), arriving at a TP of INR1,225.

Piping hot news

Govt may cap trade margins to control drug prices

• The government is planning to cap how much drug retailers and wholesalers can earn on medicines they sell in an effort to arrest rising drug prices.
• The Department of Pharmaceuticals (DoP) has recommended an increase in trade margins, or what wholesalers and retailers earn on the sale of medicines, on all drugs with maximum retail price (MRP) above Rs2 per unit—i.e. per tablet, capsule, vial, tube, bottle, injection, etc.—while retaining it at the current level of 30% for those priced below Rs2, two people aware of the matter said.