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Sun TV stock zooms 12% after strong Q4FY18 numbers

The company’s revenue grew by 23.1% yoy and 4.9% qoq to Rs717cr driven by strong subscription and advertisement revenue growth.

Shares of Sun TV Network Ltd’s stock zoomed over 12% after the company announced its Q4FY18 numbers. The company’s revenue grew by 23.1% yoy and 4.9% qoq to Rs717cr driven by strong subscription and advertisement revenue growth. Its adjusted PAT grew by 22.8% yoy and 8.5% qoq to Rs289.8cr.

The stock is the biggest gainer since February 7 and the volume was 1.3 times its three-month daily average. It was the top gainer on the BSE 500 index.

EBITDA came in at Rs522cr, up 32.7% yoy and 6.2% qoq. EBITDA margin expanded by 528bps yoy and 85bps qoq to 72.86%. Revenue, EBITDA and PAT came above estimates of Rs6,816cr, Rs481cr and Rs267cr respectively.

Advertisement and Subscription revenue grew by ~26% and ~28% yoy respectively in Q4FY18.

The stock is currently trading at Rs971 up by Rs106.35 or 12.3% from its previous closing of Rs864.65 on the BSE. The scrip opened at Rs900.10 and has touched a high and low of Rs975.50 and Rs900.10 respectively.

Sun TV Network (SUN), part of India’s media conglomerate will benefit from the digitisation story in Tamil Nadu (TN), providing the company potential to double the subscription revenue in three years (starting FY19E). However, the company is expected to remain under pressure owing to (a) increasing competition and (b) investment in original digital content. We are estimating revenue and PAT CAGR of 15% and 15.5% respectively over FY17-20E. Ad revenue growth and market share growth in TN are crucial parameters to watch for the company. Stock currently trades at 21x FY20E EPS.

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