SRH Loses IPL, But Brokerages See It Turning Real Winner For Sun TV

Brokerages are upbeat on Sun TV Network on increased income from IPL franchises making up for muted ad revenue. 

What Happened: Sun TV in its March quarter reported a 9% year-on-year increase in net profit to ₹414.7 crore compared with ₹380.2 crore in the previous year. Its revenue gained 14.4% to ₹961.3 crore against ₹840.4 crore in the same quarter the previous year.

The income also includes income from the company’s cricket franchises Sunrisers Hyderabad and Sunrisers Eastern Cape of ₹136.37 crore and ₹659.03 crore, respectively. These figures were up from ₹36.96 crore and ₹ 287.27 crore, respectively, a year ago, the company said in its regulatory filing. 

During the year, the company’s board declared four interim dividends cumulating to ₹16.75 per share.

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Brokerage Views: CLSA maintained its "outperform" call and increased the target price to ₹720. According to the brokerage, the IPL revenue increased 130% year on year but core business ad revenue fell 3%. The brokerage said the valuations are cheap and offer a dividend yield of 3%. 

Motilal Oswal reiterated the "buy" call with a target price of ₹790. The company's ad revenue grew by 10% YoY due to recovery in FMCG ad spending. According to Motilal, the prolonged weakness in ad revenue along with risk around market share loss and strong competition from OTT players are concerns for the company.

However, the stock is compelling due to improved valuation for the IPL team and a steady-state dividend payout (>50%), the brokerage said. Steady subscription revenue growth along with improving signs of FMCG spending could aid recovery in the coming period, the brokerage added.

ICICI Securities upgraded the stock to "add" and increased the target price to ₹758. The brokerage sees multiple rerating scope for the stock due to increased revenue from cricket franchises. ICICI Securities estimates a more than 10% year on year compound annual growth rate from cricket in FY25 and FY26. 

Sunrisers Hyderabad, the company's IPL team lost to Kolkata Knight Riders in the IPL final on May 26. 

Price Action: Shares of Sun TV Network were trading 3.68% down to ₹640.80 on Monday afternoon. 

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