The period given by the analyst is one year when the price of Sun TV Network Ltd. can achieve the defined goal. .
Sun TV Network Ltd., incorporated in 1985, is a mid-cap company (with a market capitalization of Rs 22,870.70 crore) operating in the media and entertainment industry.
The main product / revenue segments of Sun TV Network Ltd. include subscription revenue, advertising revenue, other services, content trade revenue, and film production and distribution revenue for the year ending March 31, 2021.
For the quarter ended 30-09-2021, the company reported consolidated total income of Rs 917.59 crore, up 4.54% from the previous quarter’s total income of 877.75 crore and up of 11.48% compared to the total income for the same quarter of last year of 823.11 crore. The company reported net profit after tax of Rs 398.31 crore in the last quarter.
Justification of the investment
The brokerage saw strong advertising revenue in the second quarter, while subscription revenue remained weak. The second stage of the IPL somewhat bolstered the numbers although the event was truncated due to the Covid-19 surge. In the future, new content on TV, OTT and movies will help all three companies. The resumption of digitalization in TN and the materialization of new cable agreements will further add to the figures. The clarity on NTO 2.0 should lead to a pickup in northbound subscription revenues. There will certainly be a negative impact of investing in content on the margins, but the margins could be supported by market share gains, IPL and further digitization as well as the proliferation of OTTs. He expects the H2 FY22 figures to be better than the H1 FY22 figures and therefore reach pre-Covid levels. With strong cash flow, the promise of a higher dividend payout (50%), healthy yield ratios and attractive valuations of 12.2x FY23E, it maintains the BUY rating with a target price of 664.
Promoter / FII Holdings
Promoters held 75.0% of the company’s capital as of September 30, 2021, while FIIs held 8.09% and DIIs 3.33%.
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