Multi Baggers

KR Choksey

5.30 AM Jan 1st 1970

Sun TV Network

BSE ID : 532733 NSE ID : SUNTV

RECOMMENDED PRICE 138.60

PEAK FROM RECO 1097.05 691.52%

CURRENT PRICE 650.75 Resource id #8

At CMP of Rs 138.60, the stock is trading at around 12.2x FY09E EPS of Rs 11.2 and 9.4x FY10E EPS of Rs 14.6. We recommend a BUY with a target price of Rs 280 representing an upside potential of 104% from current levels. At target price, the stock valued at 25x FY09E EPS of Rs 11.2.

Sun TV Network Ltd

We have analyzed the results Sun TV Network Q2FY09 results & our key findings are:

Q2FY09 Results � Key Highlights:

Net Sales : Rs 237.9 crore (up 22.3% Y-o-Y, up 6.4% Q-o-Q)

EBITDA : Rs 213.5 crore (up 38.5% Y-o-Y, up 15.6% Q-o-Q)

EBITDA margin: 74.1% (up 376 bps Y-o-Y, down 114 bps Q-o-Q)

Profit after tax: Rs 108.3 crore (up 35.1% Y-o-Y, up 5.6% Q-o-Q)

NPM : 45.5% (up 431 bps Y-o-Y, down 33 bps Q-o-Q)

Q2FY09 Results Analysis:

Operating income increased to Rs 237.9 crore (up 22.3% Y-o-Y) On Y-o-Y basis, advertising revenue (including radio business) and broadcast fee (Time slot model) grew 30% to Rs 136.0 crore and Rs 39.0 respectively. International revenue showed impressive growth of 45% to Rs 12.5 crore, inspite depreciation of rupee by 7.4% for the quarter.

Operating margins improved by 376 bps to 74.1% On Y-o-Y basis, OPM improved by 376 bps to 74.1%, due to reduction in administrative and other cost by 36% to 14.1 crore. Net profit margins improved by 431 bps to 45.5% In the quarter, Other Income was up by 115% to Rs 37.15 crore, on the back of write back of bad debt provisions and profit on sale of assets. On a steady state basis, other income would be Rs 16 crore.

Financial Snapshot:

Particulars	Q2FY09	Q2FY08	% Change	Q1FY09	% Change
Net Sales	237.9	194.5	22.3	223.6	6.4
Other Income	37.2	17.3	114.6	16.4	126.8
Total Income	275	211.8	29.9	240	14.6
Operating Expenses	61.6	57.6	6.8	55.3	11.3
EBIDTA	213.5	154.1	38.5	184.7	15.6
Interest	2.1	1.5	40.8	0	NA
PBDT	211.4	152.7	38.5	184.6	14.5
Depreciation	46.4	24.8	86.7	27.8	66.7
Tax	56.7	44	28.8	54.3	4.5
Profit After Tax	108.3	80.2	35.1	102.5	5.6
OPM (excl OI)	74.10%	70.40%	376 bps	75.30%	(114 bps)
NPM	45.50%	41.20%	431 bps	45.90%	(33 bps)

(Rs in Cr)

Going forward:

Program licensing income for FY08 was Rs 38 crore and is expected to be Rs 50 crore in FY09.

For FY09, Analogue subscription revenues would be same at the FY08 level. DTH revenues would be at about Rs 60-65 crore.

The management expects advertising revenues to grow further in Q3FY09 on the back of festival season. The major contributor for advertising revenues is FMCG sector.

The company raised advertising rates by 15% in February 2008 and would do another rate hike in CY2009.

Company plans to release one movie every alternate month and ~ 3-4 movies in FY09.

The movies would generally be low-budget movies. The consolidated capex for FY09 is Rs 75-100 crore, while the capex earmarked for movies is Rs 30-40 crore.

Valuation:

Disclaimer:

This publication has been prepared solely for information purpose and does not constitute a solicitation to any person to buy or sell a security. While the information contained therein has been obtained from sources believed to be reliable, investors are advised to satisfy themselves before making any investments. Kisan Ratilal Choksey Shares & Sec Pvt Ltd., does not bear any responsibility for the authentication of the information contained in the reports and consequently, is not liable for any decisions taken based on the same. Further, KRC Research Reports only provide information updates and analysis. All opinion for buying and selling are available to investors when they are registered clients of KRC Investment Advisory Services. As per SEBI requirements it is stated that, Kisan Ratilal Choksey Shares & Sec Pvt Ltd., and/or individuals thereof may have positions in securities referred herein and may make purchases or sale thereof while this report is in circulation.