Sun TV Network Q3 Results Review - Soft Revenue Growth Drags Profitability: Motilal Oswal

Motilal Oswal Report

Sun TV Network Ltd.'s Ebitda remained flat YoY at Rs 5.7 billion (in line) with margins contracting 200 basis points YoY, dragged by higher operating expenses and soft revenue growth. Revenue grew 3.3% YoY to Rs 8.9 billion (in line), exhibiting some moderation. This is primarily attributed to weakened ad revenues, stemming from the impact of cricket World Cup.

Prolonged weakness within the ad revenues despite festive push, coupled with risk around market share loss and strong competition from deep pocketed over the top players, continues to pose concerns.

However, steady growth within subscription revenues along with improving signs of Fmcg spends could aid recovery in the coming period. This, coupled with upbeat valuation for the new Indian premier League team and steady state dividend payout (>50%) makes the stock’s valuation compelling at 8.4 times enterprise value/Ebitda on FY25 basis.

We reiterate our 'Buy' rating on the stock with a target price of Rs 750.

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