Sun TV Network Ltd shares dived as much as 14% in intra-day trade on Wednesday, i.e. 13 November, after the company’s earnings for the second quarter ended September (Q2) failed to meet analyst estimates.
At 11:43 am, shares of Sun TV were trading at Rs 476.50, down 10%, after hitting the day’s low of Rs 455.25. Notably, the stock has corrected over 22% in the past one year.
The company on Tuesday reported a tepid rise of around 1% in consolidated profit after tax (PAT) at Rs 368.79 crore for the September quarter compared with Rs 365 crore in the year-ago period. Sun TV’s total income rose 6.79% to Rs 900.74 crore during the period under review as against Rs 843.44 crore in the corresponding quarter of the previous fiscal year, while total expenses rose by a massive 65.95% to Rs 499.54 crore as against Rs 301.01 crore a year ago.
In a separate filing, Sun TV said that its board in a meeting held on Tuesday approved an interim dividend of 50%, which is Rs 2.50 per equity share of Rs 5 each, for 2019-20. After the earnings, Emkay Global gave a ‘hold’ rating on the Sun TV stock with a target price of Rs 497. As quoted in Mint, the brokerage firm told investors: “Sun TV posted weak operating results, impacted by muted advertisement revenues and operating cost inflation although management stated that there were one-offs to the tune of Rs 28 crore.
Subscription revenue was also marginally impacted by NTO (New Trai tariff order) implementation.”
It added: “We maintain our structural negative view on traditional broadcasters due to the shift of content consumption to digital platforms, rising content costs and the potential impact on cash generation. Key risks: sustained market share recovery, better-than-expected digitization-led benefits and marginal impact from OTT on traditional TV.”
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