Reduce Sun TV:: Kotak Securities

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RECOMMENDATION: REDUCE
TARGET PRICE: RS.390 FY16E P/E: 20.3X
Following the recent run-up in Sun TV Network (16% since our last update),
we downgrade the stock to REDUCE (ACCUMULATE earlier). While improving
economic sentiment, recent developments in the cable environment are a
long-term positive for entertainment broadcasters in general (this explains
why we have raised our price target to Rs 390, from Rs 358 earlier), we
continue to be worried about the changing competitive scenario in some of
Sun TV's markets. As of now, there is little evidence to indicate a
turnaround in the two languages where Sun TV channels are lagging
(Telugu and Malayalam). Sun TV faces several risks, including imposition of
the '10+2' rule across channels, and potential for higher capital
requirements (both on movies and on other content), especially if ratings do
not pick up significantly in the coming quarters. In these circumstance, we
believe the run-up adequately captures the long-term positives that may
accrue to Sun TV from industry positives (better advertising environment,
potential for better long-term subscription revenue flows to broadcasters).

LINK
http://www.kotaksecurities.com/pdf/pdfs/FUNDSUNTV11122014093927.pdf