MOSL: SUN TV NETWORK (Buy)-Weak earnings-Outlook hazy
SUN TV NETWORK: Weak earnings; Outlook hazySUN TV NETWORK: Weak earnings; Outlook hazy(SUNTV IN, Mkt Cap USD2.6b, CMP INR470, TP INR525, 12% Upside, Buy)
** Weak ad/subscription performance: 2QFY20 performance was weak; revenue/PAT grew just 6%/4% YoY. While domestic ad growth declined 1.5% YoY, domestic subscription grew 17% YoY due to the accounting change. Sun TV has started reporting gross numbers in the NTO regime, but on a QoQ basis, the run-rate has remained flat, highlighting potential market share loss. Opex (incl. depreciation/amortization) was up 60% YoY even after factoring in INR330m one-off costs, due to higher costs toward Bangla content/OTT spends, offset by lower taxes. 1HFY20 revenue/EBITDA grew 5%/-1% YoY.
** Concall highlights: (a) Subscription revenue should reach INR4,200-4,300m quarterly run-rate by 4QFY20, with INR1b digital revenues and 20m OTT subscribers from 11m currently. (b) Incremental investment in content will be sustainable with 5-10% increase over the next quarter (with INR1.5b original content spends). (c) Loss of INR400m is expected from Bangla during FY20 and break-even should happen in the third year of operations.
** High content costs to impact profitability: We have cut revenue estimates by 6%/9% and PAT estimates by 6%/20% for FY20/21E due to (a) weak ad outlook, (b) low subscription growth in the NTO regime, and (c) Lack of new movie releases in FY20. Also, content cost should remain high due to spends on OTT, the Bangla channel and increased spends to protect market share in the NTO regime.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.