Sun TV Network has been on a notable upswing in the stock market, with its shares climbing to multi-month highs and trading near their all-time peaks. The stock has seen a remarkable 115% increase from its price of ₹415.85 in March 2023, reaching ₹890 in recent sessions.
Sun TV’s shares crossed the ₹900 mark during Thursday’s trading session for the first time in five years, signaling renewed investor confidence in the company.
The last time Sun TV reached similar heights was in January 2018, when the stock hit an all-time high of ₹1,097.80. However, following that peak, the stock entered a prolonged correction phase until March 2023, losing about 60% of its value. Since April 2023, the stock has reversed this trend, resuming its upward trajectory and coming within 5% of its previous all-time high.
Market analysts are optimistic about Sun TV’s future performance, with many predicting that the stock will surpass its previous peak. Rajesh Bhosale, an Equity Technical and Derivative Analyst at Angel One, noted that Sun TV has experienced a significant rally over the past few months.
The stock is now consolidating around the crucial 2018 high of ₹900. According to Bhosale, this consolidation could be a precursor to further gains, with prices potentially reaching four-digit levels. He suggested that any dips or periods of consolidation could be seen as buying opportunities, emphasizing the strong support around the ₹840 level.
The bullish sentiment surrounding Sun TV is further supported by domestic brokerage firm ICICI Securities, which upgraded its rating on the stock to ‘buy‘ in June. The firm set a target price of ₹1,000 per share, highlighting the potential medium-term benefits from increased advertising spending by FMCG companies. ICICI Securities also pointed to steady revenue growth from Sun TV’s cricket franchises as another positive factor for the company’s future performance.
The brokerage noted that advertising and promotion (A&P) spending as a percentage of revenue increased by 180 basis points year-on-year for the top five FMCG advertisers in India during FY24, indicating a favorable environment for media companies like Sun TV.
However, it’s not all smooth sailing for general entertainment channel (GEC) TV broadcasters like Sun TV. The impact on revenue from these channels was somewhat limited due to a strong cricket season that diverted ad spend and a shift towards digital media for promoting premium product categories.
Rural market weakness has affected the overall advertising landscape. Despite these challenges, Sun TV has managed to maintain its market presence across various genres, including general entertainment, movies, music, news, kids, and lifestyle.
Sun TV’s stronghold remains in the southern states of India—Tamil Nadu, Kerala, Karnataka, and Andhra Pradesh—where it continues to dominate the media landscape. The network has also expanded its reach by entering the Bangla and Marathi language markets, further broadening its audience base. Looking ahead, the company expects a significant increase in revenue contributions from its cricket franchise, supported by incremental revenues from movie distribution.
The broader Indian media and entertainment (M&E) industry is poised for significant growth, driven by rising consumer demand and improving advertising revenue. The sector has continued its robust growth trajectory, with television remaining the largest segment.
Digital media has solidified its position as the second-largest segment, followed by a resurgent print sector. The filmed entertainment sector has also seen a recovery, with theatrical releases doubling and overtaking online gaming as the fourth-largest segment.
India’s media and entertainment sector is unique on a global scale due to its high volumes and rising average revenue per user (ARPU). The increasing availability of fast and affordable internet, rising incomes, and the growing purchase of consumer durables have significantly bolstered the industry. As India continues to lead in digital adoption, companies like Sun TV are well-positioned to capitalize on these trends, offering investors attractive opportunities for growth.
The ongoing developments in the VFX sector and the global shift towards India as a preferred content creator add further opportunities for media companies. Sun TV, with its strong market presence and strategic expansions, is likely to be a key beneficiary of these industry trends, setting the stage for continued growth in the coming years.
