Shares of Sun TV Network Ltd. fell the most in more than three weeks as advertising revenue fell in the quarter ended December.
The south Indian general entertainment channel reported a 10% year-on-year decline in advertising revenue for the reported period amid continued viewership share loss. That, according to Kotak Institutional Equities, is a “15-30% underperformance versus peers”.
The company's subscription revenue rose 3% over the prior year to Rs 424 crore.
“Sun's underinvestment in the core TV business has led to a continued loss of ad market share. It has lost leadership in the south to Star and at this rate, it can also cede leadership to Star Vijay in the foreseeable future,” Kotak Institutional Equities said in a post-earnings note.
According to ICICI Direct, regaining viewership share for flagship channel and SunNXT growth will also be key for monetisation. “We would turn constructive when we witness SunNXT ramp-up, viewership share increase coupled with sustained ad recovery,” the brokerage said in a separate note.
Other highlights (year-on-year)
- Overall revenue rose 17% to Rs 994.1 crore, compared with the Bloomberg consensus estimate of Rs 963.1 crore.
- Net profit increased 16% to Rs 445.5 crore, against the Rs 422.9-crore forecast.
- Operating profit or Ebitda rose 2% to Rs 608.1 crore, in line with the projected Rs 600.2 crore.
- Margin narrowed 900 basis points to 61.2%.
Shares of Sun TV fell as much as 6.9% in early trade on Tuesday to Rs 513.4 apiece, and are down for the second straight session. Of the 23 analysts who have the stock under coverage, 14 have a ‘buy' rating, six suggest a ‘hold' and three recommend a ‘sell'. The average of Bloomberg consensus 12-month price target implies an upside of 4%.
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