- Joined
- 16 May 2011
- Messages
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- Reaction score
- 30,271
Revenue and PAT in line; margin hit. Sun TV reported strong standalone revenue (up 11% yoy, 1.6% above our expectations). The EBITDA margin, however, slid 311bps/371bps yoy/qoq. EBITDA was up 6.2% yoy, belying our estimates by 3%. Higher-than-expected other income aided the bottom line, which was up 11.6% yoy and 1.1% below our estimate.
Revenue drivers falling in place. Ad revenue, growing 15% yoy, softened in 4Q as expected, but came better than our expected 12%. The 17% growth in 2HFY13 marks a significant improvement over 1H (4.5%) and FY12 (-2.7%). DTH revenue growth continues to accelerate, coming in at 16% qoq vs 1%/5% in 2Q/3Q, aided by mandatory TV digitisation.
Fall in EBITDA margin is transitory. Management attributes volatile margins to proprietary content investments (lumpy costs, with potentially long-tailed revenue). It expects the long-term margins to come within the 75-80% range.
Ad-rate hikes are back. Sun TV plans to raise prime-time-slot ad rates on its flagship Sun TV channel by 19%. This is the first hike in the past 24 months, and reflects the upbeat outlook on ad spending in FY13.
Tweaked estimates, target price. We have tweaked our FY14/FY15 estimates, factoring in higher ad revenue growth (of 17%/13%, vs 14%/11% previously) and higher content costs. Our EBITDA/PAT estimates are up 1.4%/1.5% for FY14 and 2.8%/2.6% for FY15. Consequently, our price target is up, fromRs. 500 (24x FY14e EPS) to Rs. 510.
Out take. We expect recovery in ad revenue and earnings growth, and potential unlocking of subscription revenue potential to drive earnings and valuations. Current valuations (20.5x FY14e P/E) are lower than the sector multiple (25x) and past highs. Risks. Sluggishness in the macro-economic environment; delays in implementation of the digital-addressable system (DAS).
Source: Equity Bulls
Posted On: 2013-05-21 21:11:35
Revenue drivers falling in place. Ad revenue, growing 15% yoy, softened in 4Q as expected, but came better than our expected 12%. The 17% growth in 2HFY13 marks a significant improvement over 1H (4.5%) and FY12 (-2.7%). DTH revenue growth continues to accelerate, coming in at 16% qoq vs 1%/5% in 2Q/3Q, aided by mandatory TV digitisation.
Fall in EBITDA margin is transitory. Management attributes volatile margins to proprietary content investments (lumpy costs, with potentially long-tailed revenue). It expects the long-term margins to come within the 75-80% range.
Ad-rate hikes are back. Sun TV plans to raise prime-time-slot ad rates on its flagship Sun TV channel by 19%. This is the first hike in the past 24 months, and reflects the upbeat outlook on ad spending in FY13.
Tweaked estimates, target price. We have tweaked our FY14/FY15 estimates, factoring in higher ad revenue growth (of 17%/13%, vs 14%/11% previously) and higher content costs. Our EBITDA/PAT estimates are up 1.4%/1.5% for FY14 and 2.8%/2.6% for FY15. Consequently, our price target is up, fromRs. 500 (24x FY14e EPS) to Rs. 510.
Out take. We expect recovery in ad revenue and earnings growth, and potential unlocking of subscription revenue potential to drive earnings and valuations. Current valuations (20.5x FY14e P/E) are lower than the sector multiple (25x) and past highs. Risks. Sluggishness in the macro-economic environment; delays in implementation of the digital-addressable system (DAS).
Source: Equity Bulls
Posted On: 2013-05-21 21:11:35
