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Firing on all cylinders
Sun pips national peers with incredible growth in ad revenues
Our observation of the ad volume data across Sun TV channels
indicates that there has been a sharp come back of advertisers
(especially FMCG companies) starting H2FY10, helping the company
post an incredible ad revenue growth during the period. Ad volume
growth for Sun TV Network has significantly outpaced its national
peers in consumer categories during FY08-FY10. We expect the
volume growth trend in regional markets to continue, enabling the
company to sustain a high double digit growth during FY10-FY1E.
Subscription revenue to generate a CAGR of 32%
Sun TV Network has witnessed a robust growth in its subscription
revenues in recent quarters, led by a strong push from its DTH (Direct
to Home) subscription revenues. Historically, Sun TV has mostly relied
on advertisement revenues (accounting for 70% of the total revenues)
for its topline growth. However, we believe that the trend is set to
change significantly as we see various measures taken by the
company on the DTH, domestic cable and international subscription
revenues bearing fruit going forward, generating a revenue CAGR
(Compound Annual Growth Rate) of 32% during FY10-FY12E.
Expecting EPS CAGR of 27% during FY10-FY12E
We expect a consolidated EPS growth of 27% during FY10-FY12E,
helped by lower expected losses in the radio business and rising
subscription revenues. Radio business, which eroded the profitability
of consolidated operations in FY09 and FY10, is expected to cut losses
sharply going forward. In the same time, subscription revenues of the
company are expected to grow in a robust manner. We believe that
these two drivers are enough to help the company comfortably placed
to post an EPS CAGR of 27% during FY10-FY12E.
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