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Sun TV Q3FY22 First Cut - Beat on revenue led by film business

The financial results of Sun TV Network Limited for the year ending December 31, 2021 have been released.
The firm earned Rs 1105.68 crores in total income for the quarter ended December 31, 2021, compared to Rs 917.59 crores for the quarter ended September 30, 2021.

The firm earned Rs 471 crores in net profit/(loss) for the quarter ended December 31, 2021, compared to Rs 395.46 crores for the quarter ended September 30, 2021.

Surprise on margin driven by operating efficiencies, says Karan Taurani, Senior Vice President, Research Analyst (Media, Consumer Discretionary & Internet), Elara Capital.

Adding further he said, "SUNTV has reported healthy ad revenue growth of 22% YoY, on a low base (declined 9%YoY last year - Q3FY21) and has breached pre pandemic levels by 10% which too has come on a low base (declined 11% YoY in Q3FY20), due to consistent underperformance on ad growth vs industry averages in the past. Other operating revenue has been flat YoY despite partial IPL this year (as compared to last year which saw full IPL revenue), as negative impact of lower IPL revenue has been offset by release of large ticket film - Annathe . As per BARC, Viewership share for SUNTV remains to be restricted in a narrow band for major regional genres, which we believe is due to increased competitive intensity, that limits potential for strong growth in ad.revenue. Further, subs revenue too does not offer scope for positive surprise due to uncertainty over NTO 2.0. We don’t expect any major change on our revenue estimates , however our earnings estimates may change , as SUNTV has reported a big positive surprise on the same driven by operating efficiencies; will need to check on the sustainability of lower other expenses going forward; production costs too remain flat YoY, which indicates that they have not yet ramped up digital investments. The company has declared interim dividend of mere INR 2.5; await mgmt. concall for more details , which may be scheduled next week as per our interaction with the management"

 

Giving the Quarterly Highlights he pointed out - 

  • SunTV posted overall revenue growth of 6.2% YoY (up 24.7% QoQ; up 26.8% versus pre-COVID levels) to INR 10,331mn better than our estimates (Elara E: INR. 8,273mn) led by healthy ad. growth of 22% YoY to INR 3,784mn (up 55.3% QoQ & up 12.3 % v/s pre-COVID levels) on a low base YoY, supported by positive impact of festive season. Revenues (excl. IPL) were up 28% YoY to INR 9,752mn YoY.
  • During the quarter, company released a large ticket film – Annaatthe, which reported Box Office collection of INR150cr in the domestic market.
  • EBITDA margins expanded by 810bp YoY to 69.9%, despite content cost being largely flat YoY. The sharp improvement in margin was driven by other operating expenses, which declined 40%YoY
  • PAT grew mere 3.5% YoY to INR 4,573mn, despite a 20%YoY growth in EBITDA, largely impacted by lower other income (down by 32% YoY). Profit after tax (excl IPL) for the current quarter was up by 14.4 % to INR 4,378mn.
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