Share price of Sun TV Network spiked over 6 percent intraday on January 10 as Nomura maintained buy rating on the stock with target at Rs 689 per share. However, the firm is of the view that advertisement industry is likely to see sharp slowdown in the third quarter adding that subscription growth remains healthy but risks due to TRAI order.
Nomura expects Sun TV Network to report 10 percent decline in ad revenues. On the subscription side, the research firm expects 17 percent revenue growth momentum to be sustained. Overall revenue of Sun TV may decline 9 percent YoY, also due to no movie revenues, it said.
According to Nomura, margin may improve 430 bps QoQ to 63.2 percent on a weak base. Sun TV looks attractive and sees valuation at 10.4x FY21e EPS, it added.
The stock price tumbled in the first week of January after TRAI said that it had decided to modify certain provisions of the new tariff order (NTO), implemented in February 2019, to address the issue of huge discounts offered by broadcasters when channels are sold as a bouquet vis-à-vis sum of the cost of à la carte channels.
Sun TV Network was quoting at Rs 457.95, up Rs 26.60, or 6.17 percent. It has touched an intraday high of Rs 460.40 and an intraday low of Rs 435.
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