Sun TV Network
Estimate change
TP change
Rating change
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28 June 2020
4QFY20 Results Update | Sector: Media
CMP: INR421
TP: INR500 (+19% )
Buy
Ad outlook bleak; subscription growth remains high
Slowdown in ad spend, a high base of movie revenues, and loss of IPL
revenues have led to an overall drop in revenues and EBITDA, partially
offset by strong growth in subscription revenues.
Ad revenue is expected to drop 20% going ahead in FY21E, while
subscription revenues would grow at 12% in FY21E. We have thus cut our
FY21E/FY22E EPS by 4%/1%.
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
SUNTV IN
394
166 / 2.2
551 / 260
-8/9/-8
1021
Advertisement continues to drag down performance; subscription
revenues remain stable
Financials & Valuations (INR b)
FY20 FY21E FY22E
Y/E March
Sales
34.0 30.8 38.2
EBITDA
22.4 19.3 25.1
Adj. PAT
13.7 12.8 15.4
EBITDA Margin (%)
65.7 62.9 65.8
Adj. EPS (INR)
34.8 32.4 39.1
EPS Gr. (%)
-1.7 -6.9 20.6
BV/Sh. (INR)
142.7 146.2 156.4
Ratios
Net D:E
-0.5 -0.6 -0.3
RoE (%)
24.8 22.4 25.8
RoCE (%)
24.9 22.5 25.9
Payout (%)
82.9 89.1 73.9
Valuations
P/E (x)
12.1 13.0 10.8
EV/EBITDA (x)
2.9
2.9
2.7
EV/Sales (x)
6.2
6.8
6.0
Div. Yield (%)
5.9
5.9
5.9
FCF Yield (%)
6.9 12.0
8.9
Shareholding pattern (%)
As On
Mar-20
Dec-19
Promoter 75.0
75.0
DII
7.2
8.2
FII
9.0
8.7
Others
8.8
8.2
FII Includes depository receipts
Revenues were lower by 17% YoY at INR7.3b (in-line), largely attributed to a
fall in ad revenues by 15% YoY, a high base of movie revenues in the
corresponding quarter, and nil revenues from IPL games (INR570m) as the
season has been postponed on account of the COVID-19 crisis. However,
subscription revenues grew 22% YoY, albeit they declined QoQ.
Production/SG&A costs were down 28%/19% YoY, which resulted in a 17%
YoY drop in opex.
EBITDA, thus, fell 17% YoY to INR5b (in-line), whereas EBITDA margins stood
firm at 68.5% (flat YoY).
Depreciation charges were higher due to high amortization charges for
movie premiers; thus, PBT fell 25% YoY to INR3.2b.
PAT was down 12% YoY (22% miss) to INR2.5b, with PAT margins at 38%.
FY20 revenues/EBITDA fell 7%/13% YoY to INR34b/INR22b, and margins
contracted by 430bps to 65.7%.
FY20 PAT fell 2% YoY to INR13.7b, with margins contracting by 180bps to
40.3%. FY20 dividend stood at INR25/share.
Highlights from management commentary
Mar-19
75.0
7.1
9.5
8.4
Ad revenues in FY21 could potentially decline 15–20%, while subscription
revenues may grow in the double digits. The company is witnessing good
traction in ad revenues since the partial lifting of the lockdown in May’20.
All the channels have seen good growth in viewership. The company is
expected to maintain better GRP than competitor channels even post the
launch of new shows.
The company has held its ad prices in 1QFY21; this is very important as it is
becoming difficult to recover lost pricing in ad markets. SUN NXT OTT now
has over 15.5m viewers.
Receivables are not expected to rise significantly as the company has been
strict with its collections, while many cable companies have moved to the
prepaid format.
Along with a healthy balance sheet, the company is exploring inorganic or
movie library opportunities to aid expansion in the Media industry.
Research Analyst: Aliasgar Shakir
(Aliasgar.Shakir@motilaloswal.com); +91 22 6129 1565
Suhel Shaikh
(Suhel.Ahmad@MotilalOswal.com); +91 22 6129 1568;
Anshul Aggarwal
(Anshul.Aggarwal@motilaloswal.com); +91 22 6129 1559
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.