Sun TV shares gains as Kotak upgrades to ‘Buy’, hikes target price

Shares of Sun TV Network gained 3.8% in a weak market after Kotak Institutional Equities upgraded the stock to ‘buy’ from ‘reduce’ taking a ‘leap of faith’ that the company would increase dividend payment to address capital allocation concerns.

The price target is raised to Rs 540 from Rs 460, an implied return of 28.56%. Kotak Institutional Equities believes that the core TV business is on a sweet spot, gaining share from Zee Tamil. The viewership of Sun TV Network has stabilized after seven years of consistent market share decline. This could result in ad-revenue growth, according to the brokerage.

BCCI’s sale of media right for the Indian Premier League 2023-27 seasons for Rs 48,390 crore is another positive. This would benefit BCCI and IPL teams. Valuations of Sun Risers Hyderabad, Royal Challengers Bengaluru and Chennai Super Kings could rise to Rs 7,500-Rs 9,00 crore, according to Kotak Institutional Equities’ note on the sector on Wednesday. Bloomberg