Neutral on Sun TV Network - Motilal Oswal

Sun TV Network (SUNTV IN; Mkt Cap USD4.2b, CMP Rs491, Neutral)

Revenue increased 51.4% YoY and 40.8% QoQ to Rs5.98b. Excluding Rs1.51b revenue recognized for 'Enthiran', revenue grew ~13% YoY (in line).

EBITDA increased 60.6% YoY and 51% QoQ to Rs5.02b (11.4% above our estimate); EBITDA margin stood at 83.9%.

PAT excluding 'Enthiran' grew 29% YoY to Rs1.96b (13.5% above our estimate). Advertising and broadcast revenue grew 16.5% YoY (12.2% QoQ).

DTH revenue grew 59% YoY but remained flat QoQ at ~Rs700m. DTH subscriber base grew 2.6% QoQ to 6.72m.

The management expects DTH revenue to regain momentum from 4QFY11 as the revenue has been impacted largely due to timing issues. The company has announced an interim dividend of Rs5/share (v/s total dividend of Rs6.5/share in FY10). We believe Sun TV will be able to sustain its market leadership despite rising competitive activity. We expect an EPS CAGR of 20% during FY11-13. The stock trades at 21.5x FY12E EPS and 17.7x FY13E EPS. Neutral.

Source : Equity Bulls

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