SUN TV Network - 1QFY2013 Result Update - Angel Broking

For 1QFY2013, Sun TV Network Ltd (STNL) reported a 12.4% yoy decline in net profit to Rs.164cr. The company's OPM contracted by 474bp yoy to 75.9% mainly on account of 409bp yoy increase in cost of revenues (due to 3 non-fictional shows produced during the quarter).

Loss of cable revenues from TN dented top-line: For 1QFY2013, Sun TV posted a 6.2% yoy decline in its top-line to Rs.426cr on account of loss of cable revenues from Tamil Nadu (TN). However, on a positive note the company has recorded a 5.2% yoy growth in advertising revenues in 1QFY2013 and has also tied up with Arasu Cable TV which should ensure increase in subscription revenue in subsequent quarters. The revenue from DTH and international revenue grew by 6.0% yoy and 30% yoy respectively to Rs.89cr and Rs.26cr respectively even though broadcasting revenue declined by 5.1% yoy to Rs.37cr.

Outlook and valuation: At the current market price, STNL is trading at 13.9x FY2014E consolidated EPS of Rs.21.3. We believe the stock will remain volatile due to the overhang of political concerns regarding the Aircel-Maxis deal probe. Hence, we maintain our Neutral recommendation on the stock.

Source : Equity Bulls

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