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Sun TV 4Q Fy 2013
Sun TV 4Q Fy 2013
Sun TV 4Q Fy 2013
SUN TV Network
Performance Highlights
Quarterly data (Standalone)
(` cr) Revenue EBITDA OPM (%) PAT 4QFY13 473 349 73.7 178 4QFY12 427 328 76.9 159 % yoy 10.7 6.2 (311)bp 11.6 3QFY13 486 376 77.5 190 %qoq (2.7) (7.4) (371)bp (6.5)
NEUTRAL
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Media 16,680 (611) 0.7 494/177 161,193 5 20,224 6,157 SUNTV.BO SUNTV.IN
`423 -
For 4QFY2013, Sun TV Network Ltd (STNL) reported a 10.7% yoy growth in its top-line to `473cr (better than our expectations), driven largely by healthy 14.6% yoy growth in its advertising revenue to `269cr (aided by low base effect). The advertising growth momentum is expected to continue with company hiking weekday prime-time ad rates by 19% for its flagship chanel, Sun TV. Subscription revenue grows 18.0% yoy: STNL registered 18.0% yoy increase in subscription revenue to `138cr, mainly on account of a 16.3% yoy growth in the DTH segment to `100cr and 22.6% yoy growth in Analogue segment to `38cr (aided by `7.5cr from Arasu deal). The management expects to maintain healthy growth in subscription revenue aided by 2 nd phase of digitalization in its key markets of Bangalore, Hyderabad, Mysore, Coimbatore and Visakhapatnam (with 4.5mn potential digital subscribers). Among other segments, international revenue grew by 18.2% yoy to `26cr while broadcast fee declined 20.0% yoy to `36cr. Operational Performance: STNLs OPM declined by 311bp yoy to 73.7% on account of increase in content cost. Usually, the content is outsourced to third parties. However, award nights and reality shows are produced in-house, leading to rise in content cost when expenditure is booked for such specialized shows. Outlook and valuation: Sun TV is expected to be among key beneficiaries of mandatory digitization due to its strong presence in South India. At the current market price, STNL is trading at 18.2x FY2015E consolidated EPS of `23.3. We believe the stock is fairly valued and would prefer to wait for a better entry opportunity. Hence, we recommend Neutral on Sun TV.
Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 77.0 1.9 14.3 6.9
3m 3.9 (4.3)
FY2012
FY2013E
FY2014E
FY2015E
1,847 (8.3) 693 (10.0) 76.6 17.6 24.1 6.6 28.7 36.8 8.9 11.6
1,923 4.1 723 4.3 73.0 18.3 23.1 6.0 26.9 34.6 8.5 11.6
2,287 18.9 788 9.0 69.7 20.0 21.2 5.4 26.4 35.6 7.1 10.2
2,551 11.5 918 16.5 70.4 23.3 18.2 4.7 27.3 37.2 6.3 9.0
4QFY13 473 47 10.0 44 9.4 32 6.8 124 349 73.7 102 247 52.2 2.4 22 266 266 56.3 89 33.3 178 37.6 178 39 4.5
4QFY12 427 29 6.8 38 9.0 32 7.4 99 328 76.9 107 221 51.8 0.9 15 236 236 55.2 76 32.5 159 37.2 159 39 4.0
% yoy 10.7 64.7 15.8 1.8 25.6 6.2 (4.8) 11.5 157.4 43.4 13.0 13.0 15.8 11.6 11.6 11.6
3QFY13 486 34 7.0 48 9.8 28 5.8 110 376 77.5 104 272 56.0 2 11 281 281 57.8 91 32.4 190 39.1 190 39 4.8
% qoq (2.7) 40.4 (6.6) 14.4 13.3 (7.4) (2.6) (9.2) 44.9 105.0 (5.3) (5.3) (2.6) (6.5) (6.5) (6.5)
FY2013 1,818 155 31.9 177 36.5 108 22.3 441 1,377 283.4 413 964 198.4 5 55 1,014 1,014 55.8 331 32.6 683 37.6 683 39 17.3
FY2012 1,757 101 20.7 164 33.8 92 18.9 357 1,401 288.3 443 958 197.1 6 74 1,026 1,026 58.4 332 32.3 695 39.5 695 39 17.6
% chg 3.4 54.2 8.0 17.9 23.6 (1.7) (6.7) 0.6 (13.7) (25.8) (1.2) (1.2) (0.3) (1.6) (1.6) (1.6)
17.5
3.1
14.3
10.7
20.0
6.2
10.0
-
(` cr)
(7.3) (28.9)
(6.2)
(20.0)
461
454
451
427
426
433
425
486
473
(30.0) (40.0)
4Q11
1Q12
2Q12
4Q12
1Q13
2Q13
3Q12
3Q13
Top-line (LHS)
(` cr)
56
82 38
100
17
26 37
4Q13
36
Analog Subs.
2Q12 3Q12
DTH Subs.
4Q12 1QFY13
International Subs.
2QFY13
Broadcast fees
4QFY13
3QFY13
(%)
(4.0)
(10.0)
79.0
80.6
81.0
80.2
76.9
75.9
250 200
26.2 9.8
30.0 13.1
11.6 20.0 10.0
60.0
(` cr)
(%)
100
(10.0)
188
180
168
164
152
190
208
159
10.0 -
178
9.7
9.2
9.5
9.0
9.9
9.9
9.8
9.4
50
(20.0) (30.0)
1Q12
2Q12
3Q12
1Q13
2Q13
3Q13
4Q11
4Q12
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
OPM
4Q13
PAT (LHS)
yoygrowth (RHS)
4Q13
(%)
50.0
150
Net Profit grows 11.6% yoy in spite of 311bp yoy OPM contraction
The OPM for the quarter stood at 73.7%, a decline of 311bp yoy, largely on the back of 329bp yoy increase in content cost to 10.0% of sales. Usually, content creation is outsourced to third parties. However, award nights and reality shows are produced in-house, leading to rise in content cost when expenditure is booked for such specialized shows. In spite of margin pressure, net profit grew by 11.6% yoy to `178cr.
Investment arguments
DTH to be the growth driver: The deadline for second phase of digitization across 38 cities is over. Out of 38 cities, Sun TV has strong presence in five key cities: Bangalore, Hyderabad, Mysore, Coimbatore and Visakhapatnam with 4.5mn potential digital subscribers. Sun TVs DTH revenue is expected to register a strong growth on back digitization in these cities, providing a fillip to subscription revenue which has been muted for a while. The digitization drive across the nation and consumers shifting to superiorquality DTH/DAS from cable television is expected to plug distribution loopholes and lead to higher ARPUs for broadcasters. STNL, a leading broadcaster in the south Indian states of Tamil Nadu, Andhra Pradesh, Karnataka and Kerala is likely to be among the key beneficiaries from mandatory digitization.
Upside (%) -
FY2014E
FY2015E
FY2014E
FY2015E
180%
160% 140% 120% 100%
Sensex
600 500
14x
17x
20x
23x
80%
60%
40%
20%
Jun-11
Aug-11
Jun-12
Aug-12
Apr-11
Oct-10
Oct-11
Oct-12
Feb-11
Feb-12
Dec-10
Dec-11
Dec-10
Aug-10
Aug-12
Aug-11
Dec-12
Dec-11
Company background
STNL is a leading broadcaster in the south Indian states of Tamil Nadu, Andhra Pradesh, Karnataka and Kerala. The company is promoted by Kalanithi Maran. The group is present across the media value chain, viz broadcasting, radio, films, cable distribution, DTH and print media. STNL has the largest broadcasting network in South India, with 20 channels in the GEC, kids, movies and news space. Besides TV broadcasting, STNL owns FM radio licenses for 45 cities. STNL has a strong movie library comprising more than 8,500 titles, with rights across all the four major south Indian languages. Apart from having an extensive movie library, STNL purchases around 90% of all movie releases in these languages.
Dec-12
Feb-12
Feb-13
Feb-11
Jun-10
Jun-11
Apr-10
Apr-11
Apr-12
Jun-12
Oct-11
Oct-12
Oct-10
Apr-13
Feb-13
Apr-13
Apr-12
0%
400
300 200
100
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
FY2010 FY2011
197 88 1,689 1,973 37 0 34 2,045 1,213 228 30 1,035 437 266 332 461 574 0 2,045 197 93 2,057 2,347 32 13 41 2,432 1,307 185 1,374 603 254 517 435 939 0 2,432
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
Key Ratios
Y/E March
Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Dupont Analysis EBIT margin Tax retention ratio Asset turnover (x) RoIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating RoE Returns (%) RoCE (Pre-tax) Angel RoIC (Pre-tax) RoE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) WC (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Int. Coverage (EBIT / Interest)
previous year numbers
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
10
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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered
SUN TV No No No No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
11