Sun TV rallies 25% as court dismisses Aircel-Maxis case against Maran brothers

Shares of Sun TV Network advanced nearly 25 per cent in early trade on Friday after a special court discharged all charges against the Maran brothers in the Aircel-Maxis case along with all other accused in corruption and money laundering cases.

According to ICICIDirect.com, the promoter of Sun TV being involved in the 2G case had been a major overhang on the stock, over the last five years, despite the broadcaster having return ratios superior to Zee Entertainment, which trades at far superior multiples.

The scrip was trading 24.64 per cent up at Rs 687.82 around 9.30 am (IST). Shares of the company opened at Rs 607 and touched a high and low of Rs 693.85 and Rs 607, respectively, in trade so far.

“With the sky mostly clear for the Sun TV promoters, the re-rating of the stock looks imminent. We re-rate the stock at 24 FY18E EPS of Rs 30.4 (at a 20 per cent discount to Zee vs 40 per cent earlier). Hence, we upgrade our target price to Rs 730 at 24x FY18E EPS of Rs 30.4. However, any unfavourable outcome in case of a CBI appeal in the Supreme Court could be a downside risk,” ICICIDirect said.

Sun TV is the biggest regional broadcaster with a strong portfolio of channels across genres in Tamil, Telugu, Kannada and Malayalam.

According to a global brokerage house CLSA, political risks for Sun TV have also reduced recently. The company’s ad revenue has been weak but its TV ratings have improved. Subscription revenue of Sun TV will benefit from digitisation.