Shares of Sun TV Network Ltd on Wednesday fell as much as 8% after the company’s September quarter earnings, hit by muted advertisement revenue, disappointed the Street.
At 10.16am, the stock was down 8.4% at ₹484.35 on BSE, while the benchmark Sensex was up 0.1% at 40383.42 points.
The company reported a profit of ₹370 crore, up 4% year-on-year, while revenue was at ₹800 crore, up 6%. Both revenue and profit missed consensus estimate. According to a Bloomberg poll of estimates of 10 analysts, the company was expected to post a profit of ₹375 crore while revenue was seen at ₹827 crore.
"Sun TV posted weak operating results, impacted by muted advertisement revenues and operating cost inflation although management stated that there were one-offs to the tune of Rs280mn. Subscription revenue was also marginally impacted by NTO implementation", said Emkay Global in a note to its investors.
Advertising revenue, including broadcast revenue, was down 4% from a year ago at ₹350 crore. Subscription revenue rose 17% to ₹400 crore, but was below estimates. Other expenses surged 135%.
"Subscription growth was subdued during the quarter due to NTO implementation, while management believes that new deals signed with DTH and cable operators and traction on SunNxt should drive healthy growth in H2FY20. However, to drive domestic cable subscription, the company is spending higher on carriage/placement costs (LCN)", Emkay report said.
"We maintain our structural negative view on traditional broadcasters due to the shift of content consumption to digital platforms, rising content costs and the potential impact on cash generation. Key risks: sustained market share recovery, better-than-expected digitization-led benefits and marginal impact from OTT on traditional TV", the report added. The brokerage firm has hold rating on the stock with a target price of ₹497 a share.