Shares of Sun TV rose by 23% on Friday after a special CBI court dropped all the charges against the company’s owner Kalanithi Maran and his brother Dayanidhi Maran in the Aircel-Maxis case.
Shares of Sun TV rose by 23% on Friday after a special CBI court dropped all the charges against the company’s owner Kalanithi Maran and his brother Dayanidhi Maran in the Aircel-Maxis case. The stock touched a record high of Rs 699.00 before closing the session at Rs 683.85.
Volumes rose after the stock price started rising; compared with thirty days average volume of 16.04 lakh shares, it increased over 17 times to 2.7 crore shares.
“The acquittal ends a long-standing legal overhang. Also, political risks for Sun TV have reduced recently,” said CLSA in a report. The report further said that though Sun Tv’s ad revenue has been relatively weak, its subscription revenue grew 19% year-on-year in the first half of financial year (FY) 17, and this was largely due to higher growth in cable subscription revenue.
The case is related to allegations that Dayanidhi Maran, a former telecom minister, and brother of Kalanithi Maran (Sun Group’s owner) arm twisted Sivasankaran ( former promoter of an Indian telecom services provider- Aircel) to sell his stake in Aircel to Maxis owned by T Ananda Krishnan.
It was alleged that T Ananda Krishnan’s investment of R 6 billion through his company Astro into Sun Direct, Sun Group’s DTH arm, was a quid pro quo for forcing Aircel’s promoter to sell his stake to Maxis.
Later, the Enforcement Directorate (ED) attached properties of Sun TV Network and its group companies worth R740 crore in view of pending investigation around money laundering allegations pertaining to Aircel- Maxis case.
Kotak Institutional Equities in its research report said the case did not affect Sun TV’s business directly but the company was an indirect casualty as it did not take any strategic initiative in the past five years. “Promoter bandwidth constraints/ distractions took a toll on the business. We now expect sharper focus from the promoter and perhaps few bold strategic bets,” the report said.
Of the 24 analysts who track the stock, 13 gave a buy recommendation as on Friday, according to Bloomberg data.