Sun TV Network - Core business pressure; FM radio surprise - Kotak

Sun TV reported 4QFY13 EBIT of Rs2.47 bn (+12% yoy), marginally below our estimate, despite a low base in 4QFY12. Strong 15% yoy ad growth was negated by a sharp 20% yoy decline in slot sale revenue and 65% yoy growth in cost of revenues as Sun did some in-house programs; adjusted ad growth was likely less than 10% yoy (KIE estimate). FM radio financials surprised.

We retain our REDUCE rating with a 12-month fair value of Rs420 (Rs410 previously); strong subscription growth led by DTH-DAS negated by weak advertising given market share losses; competitive pressure is expected to impact cost structure and margins.

Source : Equity Bulls

Keywords