Target: ₹730
CMP: ₹571.85
Sun TV Network Q2 revenue and EBIDTA was ahead of our estimates, due to Coolie movie performance. Core ad sales declined ~13.0 per cent y-o-y amid structural shifts as FMCG brands diversify to digital medium. We expect an 8 per cent ad decline in FY26E before modest 3-4 per cent recovery during FY27-28E.
Subscription revenue grew 9 per cent y-o-y, aided by Q1 price hikes, although growth will moderate ahead. Coolie movie’s strong ₹510 crore global gross bolstered Q2, with film distribution contributing 34 per cent of revenue. The SUN Group’s other regional channels, such has Sun Marathi and Sun Neo, continue to gain market share.
We pare down our revenue by 4 per cent and EPS by 5-8 per cent during FY25-28E. Royal Challengers Bengaluru’s potential $1.5-2 billion valuation could be positive for Sun TV, given a 30 per cent salience of Sunrisers Hyderabad in target price.
Amid allocation shift by the FMCG sector, a structural reset in traditional ad regime to pare down FY26E though on low base, a modest recovery may aid 3-4 per cent growth. Consistent dividend payout of 35 per cent augurs well.
We retain Buy with a lower TP of ₹730 from ₹750 as we value core TV at 13x (unchanged) June 2027E P/E and IPL at 28x (unchanged) June 2027E P/E and newly acquired NSL at 5x June 2027E P/S.