Sun TV – Buy: Revenue up 51% Y-o-Y; Edelweiss

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Sun TV – Buy
n Revenue up 51% Y-o-Y; robust growth across revenue streams
Sun TV Network (Sun TV) reported Q3FY11 revenue of INR 5,980 mn against our
estimate of INR 5,673 mn. Ad revenue grew 16% Y-o-Y over a lower base as last year
festive season overlapped Q2. Broadcast fees jumped 20% Y-o-Y. Subscription revenue
growth was driven by 59%, 36%, and 43% Y-o-Y growth in the DTH, cable, and
international subscription revenue streams, respectively. In Q3FY11 Sun TV earned
revenues of INR 1,790 mn from the release of ‘Enthiran’ in Tamil and ‘Robot’ in Telugu
and Hindi. Additionally, INR 150 mn is expected from satellite rights, which hasn’t been
included in Q3FY11 revenues. INR 1,320 mn was spent on the production of the movie.

n EBITDA margins expand 481bps Y-o-Y
Q3FY11 EBITDA stood at INR 5,018 mn, ahead our estimate of INR 4,425 mn. The
EBITDA margin for the quarter stood at 84%. EBITDA margin expanded 481bps Y-o-Y
and 569bps Q-o-Q. The content cost was down 10% Y-o-Y, (258bps as a percentage of
sales).
n Net profit above our estimate, jumps 48% Y-o-Y
Sun TV reported profit of INR 2,255 mn, above our estimate of INR 2,042 mn. Net profit
margin, however, dipped 75bps Y-o-Y. Sun TV has declared an interim divide nd of INR 5
per share.