Dalal Street Investments
Top

Sun TV an Underperformer – Kotak Securities

August 22, 2007

Maran family controlled Sun TV Networks stock has been rated as an under performer by Kotak Securities. The stock has collapsed over the past few weeks and is now trading below 12-month DCF-based target price of Rs310.

Expecting more clarity on the emerging competitive environment especially the performance of Kalaignar TV, the channel promoted by the family of the chief minister of Tamil Nadu. Also, Sun TV’s revenues and profitability, which may be at risk from increased competition. [Read Outlook Magazine Dynasty at War May-2007] The Marans of Sun TV had substantial income directly /indirectly from Karunanidhi, CM of Tamilnadu with whom they have badly messed up.

Sun TV will be able to retain its current high market shares in all its key markets. However, this remains to be seen in light of emerging competition, particularly in Sun’s key Tamil market where Sun has a dominant market share. Sun TV is expected to report an EPS of Rs 10 for FY08 and Rs 13.5 for FY09. Kotak rates the stock as an underperfomer.

Dalal Street Analyst:
We recommend investors to watch for more clarity on how the company will be managed aftermath family feud. We certainly do not recommend a BUY even though it is quoting below its DCF based target price.

Comments

Got something to say?






Bottom