Kotak Equities Upgardes Sun TV Share Price Target; Stock Price Rises 5%

Sun TV Network’s shares jumped on June 17 when brokerage firm Kotak Institutional Equities upgraded the stock from’reduce’ to ‘buy’ with a price target of Rs 540, suggesting a 32 percent gain in a year.

Even after accounting for the sector’s structural dangers, the brokerage believes the stock is worth buying.

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“Underlying cash creation is strong; we take a chance that management will enhance dividend payout to address capital allocation concerns,” it wrote in a June 17 report.

The company’s stock has dropped more than 20% in the last year due to underinvestment in the core business and a lack of emphasis in the digital area, as well as governance issues due to reduced dividend distributions.

Concerns about the core business and a subdued digital strategy, according to Kotak Equities, have been more than sufficiently baked into the stock’s present low prices.

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The improved value of Sun TV’s IPL franchise SunRisers Hyderabad accounts for a significant portion of Kotak Equities’ stock upgrading. Over the following two years, the brokerage company anticipates the IPL team’s earnings per share to nearly treble to Rs 6.5 per share.

The new media rights agreement agreed by the Board of Control for Cricket in India (BCCI) with Disney Star and Viacom 18 for a total of Rs 48,394 crore is likely to boost Sun TV’s IPL franchise immediately.

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Analysts estimate that the new broadcast rights agreement would more than quadruple IPL clubs’ income and greatly increase their values. Sun TV’s IPL squad is valued at Rs 7,500 crore, according to Kotak Equities.

At 12:05 pm, shares of Sun TV were up 3.1 percent at Rs 422.2 on the National Stock Exchange.

Disclaimer :- The views and recommendations made above are those of individual analysts or broking companies, and not of Ours.
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