Sun TV Network Ltd shares fell as much as 8 per cent after the company’s September quarter (Q3) earning which hit by muted advertisement revenue, disappointed Street.
At 10.16 am, the stock was down 8.4 per cent at Rs 484.35 on BSE, while the benchmark Sensex was up 0.1 per cent at 40383.42 points. The company reported a profit of Rs 370 crore, up 4 per cent year-on-year, while revenue was at Rs 800 crore, up 6 per cent. Both revenue and profit missed consensus estimate. According to a Bloomberg poll of estimates of 10 analysts, the company was expected to post a profit of Rs 375 crore while revenue was seen at Rs 827 crore.
“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 Rs280mn. Subscription revenue was also marginally impacted by NTO implementation”, said Emkay Global in a note to its investors.
Later on, Ebitda margins should remain at about the same levels. Profitability, though, is expected to improve. Additional free cash flows may see the company pursuing inorganic opportunities, and could also help improve its valuation multiple on the bourses.
“Profitability is also likely to improve post the Japan exit. We increase our target multiple due to likely improvement of balance post-deal and strong free cash flow,” said ICICI Direct.
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