1. Sun TV shares continue shining on IPL rights, CLSA says buy

Sun TV shares continue shining on IPL rights, CLSA says buy

Sun TV Network shares continued to shine on the bourses and jumped by more than 2.5% in the morning trade on Tuesday.

By: | Updated: September 5, 2017 10:34 AM
Sun TV Network shares were trading at Rs 832.10 on Tuesday morning. (Image: Reuters)

Sun TV Network shares continued to shine on the bourses and jumped by more than 2.5% in the morning trade on Tuesday morning. The shares had jumped by more than 5% intraday on Monday; and closed at Rs 820 on NSE after Star India won the media rights for the Indian Premiere League (IPL) for over Rs16,000 crore for a period of five years. Sun TV is likely to gain from this development as the company’s IPL franchise SunRisers Hyderabad will earn more revenue. The shares were trading at Rs 832.10 on Tuesday morning.

Last week, a flow of positive news has triggered a sharp rise in the share prices.  Sun TV’s share price gained by over 15.70 per cent in just two trading sessions ending yesterday, after the digitisation roll-out announced on Friday.

The shares have had a dream run at the bourses so far, with returns of more than 64% in the last eight months. The scrips have returned more than 70% in the last one year. In comparison, the Nifty Media Index is up by 3.5% in the last one year. Research and brokerage firm CLSA has retained buy call on the stock, and has also revised the target price upward to Rs 965 from the earlier target of Rs 890 per share.

According to CLSA, Sun TV’s IPL revenue could rise 30 per cent from ₹143 crore last year assuming the media rights were sold for ₹9,500 crore. That would also bring in a profit of nearly ₹53 crore against a loss of ₹22 crore last year. A price of ₹12,500 crore would increase Sun TV’s revenue by 52 per cent, the brokerage house said in a report.

Analysts say that the big digitisation thrust in Tamil Nadu will lead to an increase in average revenue per user from subscribers in the state, provided it is implemented properly. This is a positive for Sun TV, as it has a big presence in the southern states.

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