Sun TV Network - Healthy ad revenue growth drives the growth... - K R Choksey

Sun TV's Q3FY13 result was in line with our expectation. Net sales stood at Rs 486crs, a healthy growth of 14.3% YoY primarily driven by 20% YoY increase in advertising revenue. EBITDA for the quarter was Rs 376crs, increased by 10.3% YoY. EBITDA margin declined by 270bps to 27.5% as programming cost increased. At net profit level, the company reported Rs 190crs, growth of 13.1% YoY led by lower depreciation. Net profit margin was 39.1%, lower by 40bps YoY.

After sluggish ad revenue growth in last couple of month, the company has reported robust advertising revenue growth as ad spends increased across all sectors of ad pie. We expect ad growth to continue considering Sun TV's dominance in Southern markets. Healthy revenue growth and cost rationalization at operational level will boost margin growth in future.

The stock has outperformed the index and expensive valuation gives little room for higher returns from current levels. Recommend HOLD.

Source : Equity Bulls

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