Sun TV reported better-than-expected operating performance in FY2021

Sun TV Network reported better-than-expected operating performance, with EBITDA rising 8.6% yoy, Emkay Global Financial Services has stated in its analysis of the media group. Ad revenues surprised positively by rising 8% yoy vis-a-vis Emkay Global’s estimate of 6% decline, while domestic subscription revenue growth of 7% fared a bit poorly compared to Emkay Global’s expectations.

Driven by movie telecast, the viewership share for its Tamil GEC has seen a revival in Q1FY22. Upcoming content launches should help improve viewership share. Management sounded optimistic on clocking 20% domestic subscription growth in FY22.

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On the other hand, the steep reduction in dividend payout to 13% versus an average of 49% over the last 5 years, despite cash and cash equivalents of Rs 41.4 billion, was a key negative. The delay in content investments in its OTT platform, Sun NXT, once again, was another negative, According to Emkay Global.

Ad revenues reverted to positive growth trajectory after eight consecutive quarters of declines, showing a growth of ~8% for the fourth quarter ended March 31, 2021. The management is hopeful of touching FY20 ad revenues this fiscal, while the ongoing COVID-19 wave has disrupted the momentum. It also expects domestic subscription revenue growth of 20%, despite pending litigation related to the implementation of NTO 2.0.

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Profit after tax (PAT) for Q4 FY2021 stood at Rs 449.66 crore, a growth of ~80%, while PAT for the year ended FY2021 registered a growth of ~11% at Rs 1520.41 crore.

The revenues for the quarter were up by ~6% at Rs 781.99 crore, as against Rs 735.I 6 crore for the corresponding quarter ended March 31, 2020. The Subscription revenues for the quarter were up by ~7% at Rs 428.12 crore, as against Rs 398.79 crore for the corresponding quarter of FY2020.