Sun TV Q1 Results Review - Inline And Healthy: Dolat Capital

Dolat Capital Report

Sun TV Network Ltd.’s Q1 FY24 is not comparable YoY on account of IPL and contribution from ‘The Beast’ movie in base quarter. Revenue / Ebit /profit after tax grew by 10.4/26.2/18.5% YoY.

Sun TV is trading at an attractive 11.8/11.2 times FY24/25E earnings per share. Sun’s strong balance sheet with C&CE of ~Rs 55-60 billion (~25-28% of mid-cap) and leadership in Tamil market drives comfort.

However, Sun TV’s low-growth, under-investment in core broadcast/digital business remains a key constraint from future proofing of business perspective.

Low dividend payout with mountain of cash raise fears of capital misallocation. These have been constraining factors for re-rating and likely to continue so despite attractive valuations.

Sun TV is a potential acquisition candidate in our view.

Events surrounding acquisition and/or increased pay-out may drive significant re-rating.

Marginally increase our EPS estimates by 2.5/3.7% for FY24/25E. 'Buy' with revised target price of Rs 585 at 12 times FY25E EPS (earlier Rs 565 at 12 times)

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