Chennai-based media conglomerate Sun TV Network gained over 9 per cent to be the top gainer on the Sensex on Monday. The gain was significant, as the benchmark index shed 490 points (1.71 per cent), and all the sectoral indices ended deep in the red.

Exceeds estimates

The shares of Sun TV gained ₹34.45 to close the day at ₹416.55. Even in the derivative segment, open interest of Sun TV February futures surged to 10.2 lakh shares from just 3.26 lakh shares on January 27.

The company for the third quarter ended December 31, 2014, posted 9 per cent growth in revenue, and close to 15 per cent growth in net profit. It also declared an interim dividend of 135 per cent (₹6.75 a share of ₹5 face value). All segments of the company, including advertising and DTH, put up a strong show, which is better than what market expected,” says LKP Research.

Advertising revenues grew by 7 per cent year-on-year as most of the client verticals spent more on advertising during the festival quarter. Besides, Sun TV also strengthened its presence in all the four southern States, it adds.

DTH revenues showed a very strong traction by growing 17.7 per cent year-on-year. This is despite slow progress in DAS implementation. Analogue revenues too went up 6 per cent, and the overall domestic subscription income grew by 14 per cent over the corresponding previous year period.

Dip in market share

However, according to a senior analyst who did not want to be named, considering the double-digit industry ad growth, Sun TV’s growth of 7 per cent on a relatively smaller base clearly implies loss of market share. In addition, he said, the company also increased its ad inventory to 18 minutes from 10-12 minutes in GEC accompanied with rate hike. But, if the TRAI recommendation of 12 minute ad/hour is implemented, it would be negative for the company.

Echoing the same view, ICICI Direct in its advice has said the ongoing CBI enquiry may also remain an overhang on the stock, going forward.

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