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August 6, 2013
SUN TV Network
Performance Highlights
Quarterly data (Standalone)
(` cr) Revenue EBITDA OPM (%) PAT 1QFY14 602 354 58.8 164 1QFY13 426 323 75.9 164 % yoy 41.4 9.5 (1,710) 0.1 4QFY13 473 349 73.7 178 %qoq 27.3 1.5 (1,498) (7.4)
NEUTRAL
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Media 16,680 (611) 0.7 494/177 161,193 5 20,224 6,157 SUNTV.BO SUNTV.IN
`429 -
For 1QFY2014, Sun TV Network Ltd (STNL) reported an impressive top-line performance, reporting a growth of 41.4% yoy to `602cr. The performance was aided by the IPL franchises contribution of `99cr to total revenue. Excluding IPL franchises contribution, the top-line grew by 18.0% to `503cr, beating our estimate of `477cr, driven largely by a 14.9% yoy growth in advertising revenues to `279cr. The momentum in advertising revenue growth is expected to continue with the company expected to hike week day prime-time advertisement rates across all its channels. Subscription revenue grows 24.2% yoy: STNL registered a 24.2% yoy increase in subscription revenue to `148cr, on account of a 20.0% yoy growth in the DTH segment to `107cr and 36.7% yoy growth in the Analogue segment to `41cr. The Management expects uptick in subscription revenue from Bangalore, Hyderabad, Mysore, Coimbatore and Visakhapatnam after KYC norms are completed by large cable operators. Among other segments, international revenue grew by 11.5% yoy to `29cr while broadcast fee declined 5.4% yoy to `35cr. Operational performance impacted by IPL franchise: STNLs OPM declined by 1,710bp yoy to 58.8% on account of its IPL franchise Sun Risers Hyderabad reporting an EBITDA loss of `31cr. However, excluding IPL franchises loss, the EBITDA margin came in almost flat yoy at 76%. The Management expects IPL operations to breakeven in FY2015. Outlook and valuation: STNL is expected to be among the key beneficiaries of mandatory digitization due to its strong presence in South India. At the current market price, STNL is trading at 20.0x FY2015E consolidated EPS of `23.8. We believe the stock is fairly valued and would prefer to wait for a better entry opportunity. Hence, we recommend Neutral on Sun TV.
Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 77.0 1.9 14.3 6.9
3m 3.9 (4.3)
1QFY14 602 45 7.5 44 7.3 159 26.4 248 354 58.8 117 236 39.3 0.7 13 249 249 41.4 85 33.9 164 27.3 164 39 4.2
1QFY13 426 40 9.4 42 9.9 21 4.8 103 323 75.9 93 230 54.0 0.2 13 243 243 57.0 78 32.3 164 38.6 164 39 4.2
% yoy 41.4 12.2 4.8 675.6 141.5 9.5 25.9 2.9 255.0 1.2 2.6 2.6 7.8 0.1 0.1 0.1
4QFY13 473 47 10.0 44 9.4 32 6.8 124 349 73.7 102 247 52.2 2 22 266 266 56.3 89 33.3 178 37.6 178 39 4.5
% qoq 27.3 (5.2) (0.5) 394.1 100.0 1.5 15.4 (4.3) (70.7) (38.1) (6.4) (6.4) (4.6) (7.4) (7.4) (7.4)
FY2013 1,818 155 31.9 177 36.5 108 22.3 441 1,377 283.4 413 964 198.4 5 55 1,014 1,014 55.8 331 32.6 683 37.6 683 39 17.3
FY2012 1,757 101 20.7 164 33.8 92 18.9 357 1,401 288.3 443 958 197.1 6 74 1,026 1,026 58.4 332 32.3 695 39.5 695 39 17.6
% chg 3.4 54.2 8.0 17.9 23.6 (1.7) (6.7) 0.6 (13.7) (25.8) (1.2) (1.2) (0.3) (1.6) (1.6) (1.6)
August 6, 2013
(` cr)
300 200
(10) (20)
454
451
425
427
426
433
486
473
602
100 -
(30) (40)
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
Top-line (LHS)
(` cr)
84 56 41
107 29 39 35
20 DTH Subs.
Analog Subs.
3Q12 4Q12
International Subs.
3QFY13
Broadcast fees
1QFY14
1QFY13
2QFY13
4QFY13
August 6, 2013
1Q14
(%)
400
( ` cr)
(%)
188
180
168
159
164
152
190
178
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
OPM
1Q14
PAT (LHS)
yoygrowth (RHS)
August 6, 2013
1Q14
164
(%)
Investment arguments
DTH to be the growth driver:
The deadline for second phase of digitization across 38 cities is over. Out of 38 cities, Sun TV has a strong presence in five key cities: Bangalore, Hyderabad, Mysore, Coimbatore and Visakhapatnam with 4.5mn potential digital subscribers. Sun TVs DTH revenue is expected to register a strong growth on back of digitization in these cities, providing a fillip to subscription revenue which has been muted for a while. The digitization drive across the nation and consumers shifting to superior-quality DTH/DAS from cable television is expected to plug distribution loopholes and lead to higher ARPUs for broadcasters. STNL, a leading broadcaster in the south Indian states of Tamil Nadu, Andhra Pradesh, Karnataka and Kerala is likely to be among the key beneficiaries from mandatory digitization.
August 6, 2013
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Company background
STNL is a leading broadcaster in the south Indian states of Tamil Nadu, Andhra Pradesh, Karnataka and Kerala. The company is promoted by Kalanithi Maran. The group is present across the media value chain, viz broadcasting, radio, films, and cable distribution, DTH and print media. STNL has the largest broadcasting network in South India, with 20 channels in the GEC, kids, movies and news space. Besides TV broadcasting, STNL owns FM radio licenses for 45 cities. STNL has a strong movie library comprising more than 8,500 titles, with rights across all the four major south Indian languages. Apart from having an extensive movie library, STNL purchases around 90% of all movie releases in these languages.
August 6, 2013
May-13
May-11
Jul-13
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
August 6, 2013
FY2010
197 88 1,689 1,973 37 0 34 2,045 1,213 228 30 1,035 437 266 332 461 574 0 2,045
FY2011
197 93 2,057 2,347 32 13 41 2,432 1,307 185 1,374 603 254 517 435 939 0 2,432
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
August 6, 2013
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
August 6, 2013
Key Ratios
Y/E March
Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Dupont Analysis EBIT margin Tax retention ratio Asset turnover (x) RoIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating RoE Returns (%) RoCE (Pre-tax) Angel RoIC (Pre-tax) RoE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) WC (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Int. Coverage (EBIT / Interest)
previous year numbers
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
August 6, 2013
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E-mail: research@angelbroking.com
Website: www.angelbroking.com
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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered
SUN TV No No No No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
August 6, 2013
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