Shares of Sun TV Network Ltd climbed nearly 4 per cent in Monday's trade following its Q2 results. Analysts said ad-revenues were muted but subscription growth sustained and that there was a sharp uptick in movie distribution. A sustained investment in multiple non-fiction shows in South India and primetime fiction shows should help Sun TV sustain viewership, said analysts. They said any value unlock in its IPL team may be an additional trigger for the stock to get re-rated. For now, they are largely mixed on the near-term stock prospects.
Following the results, the stock rose 3.56 per cent to hit a high of Rs 674.45 on BSE.
ICICI Securities said given the lack of any major secondary revenue streams in the December quarter and sports impacted first half, the stock is likely to remain range bound. The brokerage, which has a target of Rs 650 on Sun TV, said the recovery in overall ad-spends is encouraging but material improvement of spends into GEC is unlikely given excitement around the world cup has gone up with Indian team’s strong show.
"Sun TV’s healthy liquidity and cash balance offer room to intensify investments in the linear space and hyper-competitive OTT space. This, along with a healthy dividend payout potential and a reasonable valuation, offers support to the stock," said Motilal Oswal Securities.
The brokerage, however, feels that Sun TV's continued conservative approach toward investments in OTT while focusing on movie production and monetisation of its existing library remains a key risk in the fast-growing OTT space.
"The recovery in ad spending owing to the festive period and the ongoing cricket world cup would remain a key monitorable for growth going ahead," it said while suggesting a target of Rs 750 on the stock.
JM Financial said Sun TV’s Q2 growth construct was in-line with ZEE Entertainment Enterprises'.
"Top line miss was attributable to staggered revenue recognition of Jailer’s box office collection, which should be recouped in Q3. Adjusted Ebitda margin was in-line too. Sun TV echoed ZEEL sentiment of cricket impacting near-term ad-revenue outlook. We however draw comfort from signs of pick-up in FMCG’s ad spend," the brokerage said.
The GECs’ share will mean-revert once the tournament ends, JM Financial said adding: "That may push out hopes of pick-up to Q4 though. That said, Sun TV’s still low valuation given 6 per cent FCF yield and 4 per cent dividend yield suggest value realisation, despite 50 per cent up-move in past six months, has just begun. We maintain BUY with an unchanged target of target 750," it said.
Nuvama Institutional Equities roll forwarded its estimates to Q2FY26 suggested a revised target of Rs 800 from Rs 750 earlier.
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