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Robot lifts 3QFY11 numbers
ƒ Enthiran-The Robot movie drives stronger-than-expected 3Q results
ƒ Ad growth robust; DTH q-q growth to return to 10% in 4QFY11
ƒ Sun TV expects radio business to break-even at PAT level in FY11
ƒ BUY with TP of INR575, based on 25x FY12E EPS of INR23
Robot movie drives 3Q beat
Sun TV reported strong 3QFY11 results,
exceeding our revenue, EBITDA and EPS
estimates by 10%, 10% and 15%
respectively. Revenue was up 41% q-q on
the back of INR1.51b contribution from
the big budget movie ‘Enthiran – the
Robot’ (25% of revenue). EBITDA grew
61% y-y and 51% q-q, while EBITDA
margin increased from 78.2% in 2Q to
83.9% in 3Q, in line with our estimates.
PAT grew 48% y-y and 35% q-q, beating
our estimate by 15.1%. Sun TV
announced an interim DPS of INR5 with a
record date of 3 February 2011.
Segmental performance in 3QFY11
In the quarter, the advertising revenue grew 13% q-q to INR2610m. The
broadcast revenue came in at INR 420m (growth of 5% q-q and
20% y-y), due to the extension of the air-time sales model to markets
outside Tamil Nadu. The cable revenue was INR 530m (2% q-q decline,
36% y-y growth), while DTH revenue was flat q-q, at INR 700m, with
6.7m subscribers. Enthiran is the highest revenue generator in the Indian
film industry until date. Sun TV booked revenues of INR1.79b, including
INR150m towards satellite rights, which is not included in the 3Q results.
The company has amortized INR100m in 2Q and INR1.07b in 3Q out of a
total cost of INR1.32b related to the movie.
Management guidance
Sun TV reiterated its FY11 revenue guidance for the radio business, at
INR750m-800m, and breakeven at the PAT level. Management expects
DTH subscription revenue to increase 10% in 4QFY11. Management
continues to evaluate options for launching new regional television
channels, both on a standalone and partnership basis. Sun TV said that it
would mull an advertisement rate hike by April 2011 after evaluating the
market and the state of the FMCG companies, which contribute 65-70%
of the advertisement revenue.
Reiterate BUY with TP of INR 575
We reiterate BUY with a TP of INR575.00, based on 25x FY12E EPS of
INR23. Risk: loss of viewership in southern markets, inability to expand
international presence and failure of movies.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Robot lifts 3QFY11 numbers
ƒ Enthiran-The Robot movie drives stronger-than-expected 3Q results
ƒ Ad growth robust; DTH q-q growth to return to 10% in 4QFY11
ƒ Sun TV expects radio business to break-even at PAT level in FY11
ƒ BUY with TP of INR575, based on 25x FY12E EPS of INR23
Robot movie drives 3Q beat
Sun TV reported strong 3QFY11 results,
exceeding our revenue, EBITDA and EPS
estimates by 10%, 10% and 15%
respectively. Revenue was up 41% q-q on
the back of INR1.51b contribution from
the big budget movie ‘Enthiran – the
Robot’ (25% of revenue). EBITDA grew
61% y-y and 51% q-q, while EBITDA
margin increased from 78.2% in 2Q to
83.9% in 3Q, in line with our estimates.
PAT grew 48% y-y and 35% q-q, beating
our estimate by 15.1%. Sun TV
announced an interim DPS of INR5 with a
record date of 3 February 2011.
Segmental performance in 3QFY11
In the quarter, the advertising revenue grew 13% q-q to INR2610m. The
broadcast revenue came in at INR 420m (growth of 5% q-q and
20% y-y), due to the extension of the air-time sales model to markets
outside Tamil Nadu. The cable revenue was INR 530m (2% q-q decline,
36% y-y growth), while DTH revenue was flat q-q, at INR 700m, with
6.7m subscribers. Enthiran is the highest revenue generator in the Indian
film industry until date. Sun TV booked revenues of INR1.79b, including
INR150m towards satellite rights, which is not included in the 3Q results.
The company has amortized INR100m in 2Q and INR1.07b in 3Q out of a
total cost of INR1.32b related to the movie.
Management guidance
Sun TV reiterated its FY11 revenue guidance for the radio business, at
INR750m-800m, and breakeven at the PAT level. Management expects
DTH subscription revenue to increase 10% in 4QFY11. Management
continues to evaluate options for launching new regional television
channels, both on a standalone and partnership basis. Sun TV said that it
would mull an advertisement rate hike by April 2011 after evaluating the
market and the state of the FMCG companies, which contribute 65-70%
of the advertisement revenue.
Reiterate BUY with TP of INR 575
We reiterate BUY with a TP of INR575.00, based on 25x FY12E EPS of
INR23. Risk: loss of viewership in southern markets, inability to expand
international presence and failure of movies.
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