Sun TV Network shares dropped nearly 3 percent in morning on Friday after global investment firm CLSA slashed price target for the stock by Rs 100 per share.
The research house cut its earnings estimates for the company by 3-4 percent to factor in higher content costs.
Hence, it reduced the price target to Rs 770 from Rs 870 earlier, but maintained buy rating on the stock.
"New channel launches is for long-term advertising revenue boost and there are multiple catalysts for growth in subscription revenues," CLSA said.
Last week, global brokerage firm HSBC also slashed its target price for Sun TV by 17.8 percent to Rs 703 from Rs 855 earlier as the biggest worry is the company’s constant declining viewership share and the new channel is also not getting much traction.
The research house also cut its advertising revenue estimates & earnings estimates by 4-5 percent for FY20/21.
While reiterating hold rating on the stock, HSBC said higher investment by the media & entertainment company is required to enter new markets.
Meanwhile, the broadcasting firm had reported a 23.41 percent increase in standalone net profit to Rs 351.32 crore for the September quarter. Revenue during the quarter increased 14 percent to Rs 811.67 crore with subscription revenue rising 21 percent to Rs 339.79 crore in Q2 YoY.
At 09:42 hours IST, the stock was quoting at Rs 587.95, down Rs 2.60, or 0.44 percent on the BSE.
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Source: Moneycontrol
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