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UBS Investment Research
Sun TV Limited
W eak Q1 FY12 results
Event: Q1 FY12 results below UBS and consensus estimates
Sun TV reported Q1 standalone results—revenues grew 3% YoY to Rs4.54bn vs.
UBS-e Rs4.8bn. EBITDA grew 2% YoY to Rs3.66bn vs. UBS-e Rs3.8bn. The
EBITDA margin came in at 80.6%, ahead of UBS-e of 79.0%. Net profit grew
10% YoY to Rs1.88bn, below UBS-e of Rs2bn and consensus of Rs2.13bn.
Impact: maintain earnings estimates
Sun TV has achieved 22% of our FY12 net profit estimate in Q1. We see limited
near-term impact on Sun TV financials due to the unfavourable Tamil Nadu (TN)
state assembly election result. We estimate a worst-case value of Rs300 for Sun
TV, assuming FY13E worst-case EPS of Rs17.6 and 17x PE. Refer to our note
‘Sun TV: Reiterate cautious view’ dated 17 June 2011 for further details.
Action: maintain anti-consensus cautious view
Sun TV share price is down 42% YTD. We continue to maintain our anticonsensus
cautious view on Sun TV as we believe newsflow related to the 2G
scam could remain an overhang on Sun TV’s share price. The recent TN state
assembly election result was negative for sentiment given the chairman has family
ties with the DMK party.
Valuation: maintain anti-consensus Sell rating with Rs330 price target
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool. We assume a high WACC
of 15% to incorporate the high risk.
Sun TV Limited
Sun TV Network Ltd (Sun) is the largest TV broadcaster in south India and has
channels catering for the four regional languages: Tamil; Telegu; Kannada; and
Malayalam. Kalanithi Maran is the majority shareholder with a 77% stake. Sun
and its two subsidiaries have radio licences in 44 cities.
Statement of Risk
We believe the company faces regulatory risks and competitive risks in its core
business of broadcasting.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Sun TV Limited
W eak Q1 FY12 results
Event: Q1 FY12 results below UBS and consensus estimates
Sun TV reported Q1 standalone results—revenues grew 3% YoY to Rs4.54bn vs.
UBS-e Rs4.8bn. EBITDA grew 2% YoY to Rs3.66bn vs. UBS-e Rs3.8bn. The
EBITDA margin came in at 80.6%, ahead of UBS-e of 79.0%. Net profit grew
10% YoY to Rs1.88bn, below UBS-e of Rs2bn and consensus of Rs2.13bn.
Impact: maintain earnings estimates
Sun TV has achieved 22% of our FY12 net profit estimate in Q1. We see limited
near-term impact on Sun TV financials due to the unfavourable Tamil Nadu (TN)
state assembly election result. We estimate a worst-case value of Rs300 for Sun
TV, assuming FY13E worst-case EPS of Rs17.6 and 17x PE. Refer to our note
‘Sun TV: Reiterate cautious view’ dated 17 June 2011 for further details.
Action: maintain anti-consensus cautious view
Sun TV share price is down 42% YTD. We continue to maintain our anticonsensus
cautious view on Sun TV as we believe newsflow related to the 2G
scam could remain an overhang on Sun TV’s share price. The recent TN state
assembly election result was negative for sentiment given the chairman has family
ties with the DMK party.
Valuation: maintain anti-consensus Sell rating with Rs330 price target
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool. We assume a high WACC
of 15% to incorporate the high risk.
Sun TV Limited
Sun TV Network Ltd (Sun) is the largest TV broadcaster in south India and has
channels catering for the four regional languages: Tamil; Telegu; Kannada; and
Malayalam. Kalanithi Maran is the majority shareholder with a 77% stake. Sun
and its two subsidiaries have radio licences in 44 cities.
Statement of Risk
We believe the company faces regulatory risks and competitive risks in its core
business of broadcasting.
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