Sun TV Network - Sun shines beyond the near-term ad-cap blues - Kotak

Sun's stock has under-performed the benchmark BSE-30 Index by over 11.1% over the past three months, led by weak 2QFY14 financials. Factors behind weak advertising—(1) compliance with the TRAI adcap of 12 minutes/hour (from 17-18 minutes/hour), (2) resistance to price hike (dualpricing in the market given ad inventory shared with content partners) and (3) market share loss—are moderating. We expect ad recovery by FY2015 coupled with DAS-led robust growth in subscription revenue.

We upgrade the stock to ADD from REDUCE with unchanged 12-month forward DCF-based fair value of Rs. 430. Dynamics are improving in SunRisers IPL franchise and FM radio business but they have limited upside.

Source : Equity Bulls

Keywords