Shares of Sun TV Network cracked 8.87% to close at ₹502.25 on BSE on November 14 after the company's September quarter earnings.
On November 11, the company reported a 3% year-on-year (YoY) rise in Q2FY23 PAT (profit after tax) at ₹407.31 crore against a profit of ₹395.46 crore in the corresponding quarter last year. However, on a quarter-on-quarter (QoQ) basis, the profit figures fell 17.5% against ₹493.88 crore in Q1FY23.
Revenue from operations fell to ₹825.65, down 2.7% YoY against ₹848.67 crore and 32.3% QoQ against ₹1,219.14 crore.
The stock hit its 52-week low of ₹402.55 on June 23, 2022, and has risen 37% since then (as of November 11).
Brokerage firms have mixed views on the stock after the September quarter scorecard. Some of them have raised their target prices.
Brokerage firm ICICI Securities has maintained a 'hold' view on the stock and raised the target price to ₹540 from ₹470.
ICICI Securities observed that even though Sun TV Network’s Q2FY23 ad revenue grew 0.2% YoY to ₹340 crore, it slowed significantly versus Q1FY23. Nonetheless, it performed better than ZEE (down 7.7%).
Subscription revenue continued to decline due to the impasse on NTO 2.0, and the underperformance of SunNXT due to limited investment in content, technology and marketing.
"Generally, linear TV (non-sport) ad revenue growth may face headwinds as digital platforms gain ad revenue pie, and the sports segment becomes aggressive after significantly higher bid prices for IPL rights. Regulation and shift to OTT are hurting subscription revenue," ICICI Securities said.
"We have increased our earnings per share (EPS) estimates by 6-10% over FY23EFY24E on lower amortisation costs as Sun TV is looking for only one movie release in the second half of FY23. Accordingly, we increase our target price to ₹540 from ₹470 with an unchanged P/E multiple of 11 times FY24E EPS," said the brokerage firm.
Kotak Institutional Equities downgraded the stock to an 'add' from a 'buy' but raised the target price to ₹600 from ₹550 earlier.
"Sun reported flat ad revenues on a YoY basis and versus Q2FY20, better than peer Zee (18% below Q2FY20) on the back of stable viewership. EBIT of the core broadcasting business (ex-IPL, ex-movie production) was about 22% above Q2FY20 levels (LFL adjusted for an accounting change starting FY2022)," said Kotak.
"We maintain estimates and downgrade by a notch to an 'add' from a 'buy' with a revised fair value (target price) of ₹600 ( ₹550 earlier). The stock offers some more upside even after factoring in structural risks," Kotak said.
JM Financial maintained a buy call on the stock with an unchanged target price of ₹760.
“We lower our FY23E and FY24E EPS by 4.6% and 2.3% respectively. However, Sun TV’s sustained viewership share suggests it is well-positioned to capitalise when the growth revives. Our positive stance on Sun TV is also premised on its deep value. In our view, the broadcasting business is significantly undervalued at nearly six times FY24 core PER (ex-IPL, ex-cash),” said JM Financial.
According to a MintGenie poll, an average of 18 analysts have a ‘buy’ call on the stock.
Disclaimer: The views and recommendations given in this article are those of broking firms. These do not represent the views of MintGenie.