MOSL: SUN TV NETWORK (Buy)-Revenue slows; OTT segment turns profitable
SUN TV NETWORK: Revenue slows; OTT segment turns profitable
(SUNTV IN, Mkt Cap USD2.7b, CMP INR496, TP INR580, 17% Upside, Buy)
- Slowing ad spends and a high base for movie revenue led to a decline in revenue and EBITDA. OTT segment profitability though was comforting.
- Economic weakness has slowed down ad spends and the TRAI’s latest bouquet norms bring in uncertainty over subscription revenue growth. We thus cut our EPS estimate by 5% for FY20 but maintain it for FY21.
Slowing ad revenue, high base take a toll
- Revenue declined 10% YoY to INR8.1b (16% miss) in 3QFY20, majorly due to falling ad revenue (-12% YoY). Also, the base effect came into play as the year-ago period had high revenue of INR1b from blockbuster movie distribution, which declined to INR150m in 3QFY20.
- Production cost was down 10% YoY which led to flat opex and provided some cushion to EBITDA (-13% YoY to INR5.8b; 13% miss).
- PBT was down 8% YoY at INR4.9b (16% miss), while PAT increased 6% YoY to INR3.7b (14% miss).
- Excluding the base effect, overall revenue was up 1.5% YoY in 3QFY20, PBT would have been higher by INR135m and PAT growth was 12% YoY.
Sun TV Network Limited. Sun TV Network Limited is engaged in providing broadcasting services. The Company operates through Media and Entertainment segment. Its geographical segments include India and Others. It is engaged in producing and broadcasting satellite television and radio software programming in the regional languages of South India. It operates television channels in approximately four South Indian languages to viewers in India, and also to viewers in Sri Lanka, Singapore, Malaysia, the United Kingdom, Europe, the Middle East, the United States, Australia, South Africa and Canada. It operates Sun TV channel. Its other satellite channels are Surya TV, Gemini TV and Udaya TV. It is also into the business of frequency modulation (FM) radio broadcasting at Chennai, Coimbatore and Tirunelveli. It also has the license to operate an Indian Premier League franchise Sun Risers Hyderabad. It has presence across various genres, such as general entertainment, movies, music, news, kids, action and life.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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