Buy Sun TV Network - Ventura

We initiate coverage on Sun TV Network Ltd (Sun TV) as a BUY with a price Objective of Rs.625 representing a potential upside of ~52.4% over a period of 24 months. At a CMP of Rs.410, the stock is trading at 22.2x and 18.1x its estimated earnings for FY13 and FY14 respectively.

With ~2 mn households in Chennai (1.3-1.5 mn cable subscribers and 0.5 mn DTH subscribers) and ~11 mn subscribers in five cities of Phase II (Bangalore, Hyderabad, Mysore, Coimbatore and Vishakhapatnam), Sun TV is expected to be one of the biggest beneficiaries of impending digitisation in these geographies.

Sun TV's revenues are expected to grow at a CAGR of 14.6% to Rs.2,778.0 crore with cable subscription revenues growing at a CAGR of 30.2% while DTH is expected to grow at a CAGR of 21.6% by FY15. In line with revenues, PAT is expected to grow at a 15.6% CAGR from Rs.692.9 crore in FY12 to Rs.1,070.6 crore by FY15.

Source : Equity Bulls

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