Sun TV Plummets 6% Following Q4 Earnings, Brokerage Warns of Continued Ad Revenue Slump

Sun TV Network Reports Subdued Earnings, Shares Fall 6 Percent

Sun TV Network's fourth-quarter earnings have been met with a subdued response from investors, with shares of the broadcaster falling six percent in Friday's session on the National Stock Exchange (NSE). The company's shares were trading at Rs 488.15, down Rs 30.60 or 5.90 percent.

The broadcaster's consolidated net profit for the March quarter stood at Rs 232 crore, a decline of 37.4 percent from Rs 370.8 crore in the corresponding period last year. Revenue from operations also declined, falling 6.3 percent year-on-year to Rs 882.5 crore from Rs 941.8 crore earlier.

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The company's operating performance also weakened during the quarter, with EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) falling 8.9 percent year-on-year to Rs 390.7 crore. The EBITDA margin narrowed to 44.3 percent from 45.5 percent in the year-ago quarter.

Sun TV Network's profitability was impacted by non-recurring items, including mark-to-market provisioning on mutual fund investments and impairment recognized on investments in one of its radio investees. The company also noted that the March quarter did not include the one-off interest income that had boosted other income in the corresponding quarter last year.

Motilal Oswal has commented on the stock, stating that advertising revenue is likely to remain muted. The brokerage has also revised its target price for Sun TV Network to Rs 575, based on a sum-of-the-parts (SoTP) valuation. This implies a 13x FY28E P/E multiple, and reiterates the brokerage's Neutral rating.