The stock closed at ₹819.5 on Monday, down 10.6% over the previous day. Sun TV’s consolidated profit for April-June fell 5.5% to ₹560 crore from the same period a year ago. Revenue from operations declined 2.7% to ₹1,312.4 crore during the quarter..
Analysts said the company’s June quarter profits have not been able to justify the recent rise in share valuations.
“The share price has declined because of muted performance across the board and also because of an increase in valuations after the stock has gone up by almost 50% in the last six months,” said Karan Taurani, media analyst at Elara Capital.
Taurani said Sun TV’s growth and profitability have been a ‘negative surprise’. Elara Capital has downgraded the stock’s rating from a ‘buy’ to a ‘reduce’, and has set a price target of ₹860.”In the past, investors added Sun TV to their portfolio as it has maintained a stable margin with good dividends consistently, and has always traded in a range of 15-20 PE (price to earnings),” said Dharan Shah, founder of Tradonomy.com, a Mumbai-based investment research advisor. “This time the company has missed the margins and seen a decline across all segments of revenue.”Shah said the stock faces major resistance at around ₹950 and he sees more upside only once the stock crosses this level again.
Motilal Oswal Financial Services has downgraded the stock to ‘neutral’ from a ‘buy’ earlier, with a price target of ₹860. JM Financial maintained its ‘buy’ rating and raised its target price to ₹1,180, seeing 44% upside from Monday’s close.
“Investors should wait for a fall to its key support levels of ₹785 and ₹580 levels before buying it,” said Shah.
