Sun TV Network Ltd. share price target

12 August 2018 SUNTV reported splendid 1QFY19 results, led by a steady growth in ad/subscription revenue (in-line) and a positive surprise from the IPL business. IPL revenue at INR3.9b (INR1.4b in 1QFY18) grew by 1.7x YoY, leading to a robust growth of 42% YoY in standalone revenue to INR11.2b (+56% QoQ, 15% beat). This provided an impetus to the steep growth of 64% YoY (41% QoQ) in EBITDA to INR7.3b (23% beat) and margin expanded by 860bp YoY to 65.6%. Consequently, PAT surged by 63% YoY (17% beat) to INR4.1b. The IPL business turned profitable with a bang PBT of INR2b v/s INR225m in 1QFY18 (43% beat), driving margins. Ad revenue jumped up by 20% YoY to INR3.6b (in-line), mainly on the back of a low base (GST impact). Digitization led to a growth of 21% YoY in DTH revenue and a growth of 4% YoY in cable revenue drove the uptick of 15% YoY in domestic subscription revenue (INR3.

SUN TV reported better-than-expected operating profit, which was driven by beat in the IPL. IPL Revenue/EBITDA was 41%/55% higher than estimates. Ex-IPL EBITDA was down by 3% and EBIT was lower by 8%, impacted by higher amortization expenses. Ad growth of 17% was in line with estimate while domestic subscription growth of 16% was lower than our estimate of 20%. Management attributed higher base of subscription...

After being hurt by IPL in May 2018, and then by ARASU withdrawing feeds in June 2018, the viewership share for Sun TV channel has increased by 280bp in the last six weeks. Uptick in viewership share on resumption of ARASU feeds, new launches, and increasing share of commission-model-based shows should drive 13% CAGR in ad revenue over FY18-20. Foray into the Bangla genre (market size: INR7b), which is likely before the end of FY19, could cost ~INR1.5b annually, translating into 3-5% loss of PBT. However, it should expand SUNTV's target market and earnings growth potential

driven by the digitization wave covering almost 50% of Tamil Nadu (TN) although there has been delay in it. Also the challenging political environment for proliferation of digitization which was prevalent till a year back has been eased with the demise of Jayalalithaa and Sun TV having signed a deal with Arasu cable. With the downward revision in the franchise fees by the BCCI and good performance by their team, the IPL business is expected to post spectacular results...

Revenue increased by 4.93% to Rs. 716.95 Cr in Q4FY18 when compared to the previous quarter. Sun TV Network Ltd Q4FY18 results Comment

Q4FY18 result above expectation: Company posted revenue growth of 23.1% to Rs7170mn(5.2% above expectation) on the back of 23% YoY growth in advertisement & broadcast fee revenues while analog subscription revenues was up 47% and growth in DTH subscription revenue was 20% YoY. Operating profit was up 32.7% YoY to Rs5,224mn as operating margin expanded by 529bps to 72.9%. Depreciation and movie amortisation cost was up 55% leading to EBIT growth of 27%YoY with margins expansion by 184bps. PAT rose 23% YoY to Rs2,898mn (6% above expectations)....

Sun TV continued its industry leading ad revenue growth in Q4FY18 for a second consecutive quarter. The company reported ad revenue growth of ~26% YoY, which we believe was also aided by a favourable base (~6% decline in base quarters). We note that competitive pressure in the Tamil market led by reality/high cost shows focus by competitors such as Colors and Star, could lead to near term rating pressure. However, we highlight that Sun's leadership and market understanding lends it a strong competitive advantage. The company has reiterated that it could enter a...

Subscription revenues are likely to grow at 16% CAGR over FY18-20, led by digitization in Tamil Nadu. We believe there is further upside, driven by higher market share of DTH players, growth in MSO-led subscription revenue following TRAI's tariff order requiring price parity, as well as growing HD penetration and ARPU increase. Higher viewership on the back of content rejig coupled with shift to commission model should help SUN TV capitalize on potential ad revenue growth. Given the low base of FY17, we expect 14% CAGR over FY 18-20. Near doubling of IPL revenue to INR2.8b, driven by substantially higher auction of media rights and fresh inventory driving the radio business bodes well. Steady movie investments should lead RoCE to reach ~33% by FY20

ICICI Securities Ltd | Retail Equity Research Revenues came in at | 683.3 crore (up 15.9% YoY) vs. our estimate of | 673.1 crore aided by higher-than-expected ad revenue growth. Ad revenues grew ~18.9% YoY (core ad growth of 21.6% YoY), ahead of our estimate of 15% YoY growth. Subscription revenues grew ~16.5% YoY to | 281.8 crore (in line with our estimate) EBITDA came in at | 491 crore, up 11.7% YoY and in line with our estimate of | 492.7 crore, as topline beat was offset by higher...

EBITDA up 12% YoY: Standalone revenue grew 16% YoY to INR6.8b (in-line), led by 22% ad revenue growth and 16% domestic subscription growth. EBITDA grew 12% YoY to INR4.9b (4% miss), with 260bp YoY margin contraction to 72%. Production cost was high during the quarter due to shift from private to commission model, and high-value fiction content. PAT grew 11% YoY to INR4.1b (10% miss), below EBITDA growth, largely on lower other income. Board declared an interim dividend of INR2.5/share.Subscription, ad growth to fire: SUNTV remains a sweet spot, with both subscription and ad revenue firing on all cylinders. Management indicated that potentially 10-12m Tamil Nadu analog subscribers are likely to move to digital cable by FY19, offering INR3.5b incremental revenues. Of these, already 3m set top boxes are seeded by Arasu and other MSOs. Further improvement in rating across Tamil Nadu, Malayalam and Kannada channels is allowing healthy ad growth. We expect revenue/PAT CAGR of 16%/24% over FY18-20.