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Sun TV Network's second-quarter revenue and EBITDA surpassed expectations, largely due to strong movie performance and distribution, contributing 34% of revenue. While core ad sales saw a ~13.0% year-on-year decline as FMCG brands shift to digital, subscription revenue grew 9%. Analysts expect modest ad recovery by FY27-28. The company retains a 'Buy' rating with a revised target price of ₹730, citing potential positive impacts from IPL team valuations.
Sun TV Network has released its second-quarter financial results, surpassing analyst expectations with strong revenue and EBITDA figures, largely due to its movie business which accounted for 34% of revenue and ₹510 crore in global gross receipts. However, core ad sales declined by approximately 13.0% year-on-year as FMCG brands increasingly shift advertising budgets to digital platforms. Analysts forecast an 8% decline in ad sales for FY26, with a modest 3-4% recovery expected in FY27-28. Subscription revenue grew 9% year-on-year, aided by price hikes, though future growth will moderate. Regional channels like Sun Marathi and Sun Neo are gaining market share.
Analysts have revised forecasts, reducing revenue estimates by 4% and EPS by 5-8% for FY25-28. The potential $1.5-2 billion valuation of Royal Challengers Bengaluru's IPL team is seen as a positive, considering the 30% salience of Sunrisers Hyderabad in Sun TV's target price. Despite structural ad market shifts, a gradual recovery is anticipated. The company's consistent 35% dividend payout is favorable.
Analysts maintain a 'Buy' rating but have lowered the target price to ₹730 from ₹750. Valuation is based on core TV at 13x June 2027E P/E, IPL at 28x June 2027E P/E, and NSL at 5x June 2027E P/S.
Impact
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Impact Rating: 8
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