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ASSIGNMENT OF SAPM ON

FUNDAMENTAL ANALYSIS OF SUN TV

SUBMITTED TO SUBMITTED BY  MRS PALLAVI DAWRA SALONI SOOD

MBA-2c 

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INTRODUCTION ABT INDUSTRY

The media and entertainment industry is one of the fastest growing

industries in theworld. The components of M&E industry are film, television,

advertising, print mediaand music. The rapid growth of the television

industry has made it the most significantcomponent, of M&E in value

termsIts status as the preferred mode ofentertainment of the people is

obvious from the fact that it now contributes more than 60percent of the

entertainment industry's revenues. Television the major contributor to

theoverall industry revenue is estimated to grow at a stable rate over the

next five yearsresulting in increased viewership having wider range of 

channels to select from

PERFORMANCE

The industry has suffered a great deal during the economic recession, with

U.S. top media companies managing flat revenues in 2009 and a 5%

contraction in 2010 according to Ad Age reports. Many players, dominated by

those in the media industry, have plunged into bankruptcy, primarily due to

the shrinking revenues coupled with massive debt loads taken on in the

market boom. Though certain digital media firms fared well.

Growth Potential

The Indian entertainment and media sector is one of the fastest growing

sectors in the economy, and its segments have all witnessed tremendous

double digit growth in the last few years. The past 2 years were tumultuous,

especially due to poor liquidity in the system for financing big projects for 

the big and small screen. However, with global indicators realigning

themselves once again, the Indian media and entertainment industry too

looks poised to resume where it left earlier.

Future Prospects

The greatest opportunities naturally lie in those sub-areas that are expected

to grow the fastest over the next few years, namely, in the development of 

digital distribution platforms for TV such as DTH, digital music platforms,

digital media advertising (internet, mobile and digital signage) and global

cinema content.

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Peer Comparison

Company

Market

Cap

(Rs. in Cr.)

P/E

(TTM)

(x)

P/BV

(TTM)

(x)

EV/EBIDTA

(x)

ROE

(%)

ROCE

(%)

D/E

(x)

Vatsa Music 127,897.35 0.00 35.56 0.00 0.0 0.0 0.00

Zee

Entertainmen11,844.79 24.08 4.08 13.77 20.1 29.1 0.02

Sun TV

Network11,751.47 14.90 4.93 10.67 35.1 52.6 0.00

Dish TV 8,214.85 0.00 130.85 24.16 0.0 0.0 4.30

D B Corp 4,115.78 17.14 4.83 10.79 33.7 36.5 0.34

UTV Software 3,933.15 49.56 3.49 18.04 12.6 9.0 0.67

H T Media 3,347.58 16.84 2.86 11.44 16.3 19.7 0.25

Jagran

Prakashan  

3,306.39 16.54 4.72 11.45 31.4 38.3 0.23

Eros

Intl.Media2,152.71 28.17 3.90 11.54 19.3 21.6 0.47

TV18

Broadcast1,531.89 0.00 2.15 0.00 0.0 0.0 0.67

D C Holdings 1,382.45 16.59 1.08 4.50 12.8 18.5 0.26

Ent.Network 1,211.06 25.23 3.16 10.85 12.4 16.2 0.05

Hathway

Cable1,183.60 0.00 1.40 17.30 0.0 0.0 0.39

Hindustan 1,061.95 19.71 2.80 9.67 23.6 26.5 0.34

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Media

Prime Focus 843.12 48.56 2.79 13.00 6.2 5.4 1.82

Sun TV Network Limited (Sun Network) maintains its dominant position in

the southernstates of India as one of the largest television and radio

entertainment Company in Indiawith a portfolio of 20 channels spread

across four languages and in six genres of GEC,news, music, movies, kids

and comedy. Sun Network also has a large network pan India inthe FM

Radio broadcasting segment with 44 FM licenses along with its

subsidiaries. SunNetwork continues to capitalize on its leadership position,

built over the years, byfortifying its hold over key aspects of pricing and

access to quality content. Sun Networkhas a distinct advantage in the

southern regional markets on account of its strongunderstanding of the

flavor and with key competitive strengths including that of a largemovie

library of regional languages. Sun Network is the preferred choice for 

contentproviders as it is the only player with maximum reach in the areas it

operates.

Income Statemen of SUN TV NETWORK LTD.

For the year ended 31.3.2011

Particulars Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-06

INCOME :

Sales Turnover 1,923.71 1,395.01 1,008.20 861.06 676.95 321.91

Excise Duty 0.00 0.00 0.00 0.00 0.00 0.00

Net Sales 1,923.71 1,395.01 1,008.20 861.06 676.95 321.91

Other Income 46.79 42.51 83.32 64.93 49.45 16.44

Stock Adjustments 0.00 0.00 0.00 0.00 0.00 0.00

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Total Income 1,970.50 1,437.52 1,091.52 925.99 726.40 338.35

EXPENDITURE :

Raw Materials 0.00 0.00 0.00 0.00 0.00 0.00

Power & Fuel Cost 11.86 7.33 6.37 5.61 4.38 2.53

Employee Cost 45.21 41.85 27.87 26.39 22.84 8.65

Other 

Manufacturing

Expenses

114.27 100.57 91.86 70.64 84.30 32.66

Selling andAdministration

Expenses

166.73 100.83 98.91 81.31 57.96 26.26

Miscellaneous

Expenses27.75 33.88 11.60 55.23 25.64 47.59

Less: Pre-operative

Expenses

Capitalised

0.00 0.00 0.00 0.00 0.00 0.00

Total Expenditure 365.82 284.46 236.61 239.18 195.12 117.69

Operating Profit 1,604.68 1,153.06 854.91 686.81 531.28 220.66

Interest 1.98 1.20 3.89 5.56 3.09 6.50

Gross Profit 1,602.70 1,151.86 851.02 681.25 528.19 214.16

Depreciation 447.38 285.44 184.92 113.03 119.29 14.66

Profit Before Tax 1,155.32 866.42 666.10 568.22 408.90 199.50

Tax 376.03 291.23 203.40 190.80 150.29 70.60

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Fringe Benefit tax 0.00 0.00 0.63 3.70 0.54 0.28

Deferred Tax 7.07 7.81 24.96 6.74 -10.75 -1.61

Reported Net Profit 772.22 567.38 437.11 366.98 268.82 130.23

Extraordinary Items -1.83 0.23 10.68 0.09 0.03 1.43

Adjusted Net Profit 774.05 567.15 426.43 366.89 268.79 128.80

Adjst. below Net

Profit0.00 0.00 0.00 0.00 83.05 0.00

P & L Balance

brought forward

1,149.07 983.31 705.18 490.16 234.87 404.32

Statutory

Appropriations0.00 0.00 0.00 0.00 0.00 0.00

Appropriations 478.74 401.62 158.98 151.96 96.58 299.68

P & L Balance

carried down1,442.55 1,149.07 983.31 705.18 490.16 234.87

Dividend 344.82 295.56 98.52 98.52 60.08 198.78

Preference Dividend 0.00 0.00 0.00 0.00 0.00 0.00

Equity Dividend % 175.00 150.00 50.00 50.00 50.00 9,270.00

Earnings Per Share-

Unit Curr 18.16 13.15 10.67 8.89 37.63 16.51

Earnings Per 

Share(Adj)-Unit Curr  18.16 13.15 10.67 8.89 9.41 NA

Book Value-Unit

Curr 60.54 51.13 45.49 37.32 172.64 49.98

BALANCE SHEET of SUN TV NETWORK LIMITED

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As on 31.3.2011

Particulars Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-06

SOURCES OFFUNDS :

Share Capital 197.04 197.04 197.04 197.04 68.89 62.00

Reserves Total 2,188.67 1,817.97 1,595.47 1,273.63 1,120.43 247.90

Total

Shareholders

Funds

2,385.71 2,015.01 1,792.51 1,470.67 1,189.32 309.90

Secured Loans 0.00 0.00 0.00 0.00 0.00 70.01

Unsecured Loans 0.00 0.00 0.00 0.00 0.00 163.30

Total Debt 0.00 0.00 0.00 0.00 0.00 233.31

Total Liabilities 2,385.71 2,015.01 1,792.51 1,470.67 1,189.32 543.21

APPLICATION OF

FUNDS :

Gross Block 2,328.05 1,590.93 1,198.37 821.66 572.67 332.63

Less :

Accumulated

Depreciation

1,332.72 905.95 627.87 460.22 348.29 196.07

Less:Impairment

of Assets0.00 0.00 0.00 0.00 0.00 0.00

Net Block 995.33 684.98 570.50 361.44 224.38 136.56

Lease Adjustment 0.00 0.00 0.00 0.00 0.00 0.00

Capital Work in

Progress17.06 311.39 151.87 131.92 43.49 4.21

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Investments 541.17 506.64 258.48 258.48 130.89 31.83

Current Assets,

Loans & Advances

Inventories 0.75 0.33 0.13 0.27 0.19 0.16

Sundry Debtors 388.05 300.18 224.68 251.85 206.19 96.27

Cash and Bank 584.40 424.20 363.90 416.66 562.12 72.16

Loans and

Advances320.47 252.92 443.86 296.30 208.17 278.37

Total Current

Assets

1,293.67 977.63 1,032.57 965.08 976.67 446.96

Less : Current

Liabilities and

Provisions

Current Liabilities 247.07 155.01 148.08 128.39 145.02 57.18

Provisions 173.47 276.71 46.73 116.72 46.69 16.01

Total CurrentLiabilities

420.54 431.72 194.81 245.11 191.71 73.19

Net Current

Assets873.13 545.91 837.76 719.97 784.96 373.77

Miscellaneous

Expenses not

written off 

0.00 0.00 0.00 0.00 0.00 0.00

Deferred Tax

Assets13.81 12.22 11.61 12.33 6.92 1.41

Deferred Tax

Liability54.79 46.13 37.71 13.47 1.32 4.57

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Net Deferred Tax -40.98 -33.91 -26.10 -1.14 5.60 -3.16

Total Assets 2,385.71 2,015.01 1,792.51 1,470.67 1,189.32 543.21

Contingent

Liabilities72.44 59.27 19.00 0.00 0.00 0.00

Key Ratios

Years Mar-11 Mar-10 Mar-09 Mar-08 Mar-07

Debt-Equity Ratio 0.0 0.0 0.0 0.0 0.2

Long Term Debt-Equity Ratio 0.0 0.0 0.0 0.0 0.0

Current Ratio 2.4 2.9 4.1 4.3 2.8

Fixed Assets 1.0 1.0 1.0 1.2 1.5

Inventory 3,562.4 6,065.3 5,041.0 3,743.7 3,868.3

Debtors 5.6 5.3 4.2 3.8 4.5

Interest Cover Ratio 584.5 723.0 172.2 103.2 133.3

PBIDTM (%) 83.4 82.7 84.8 79.8 78.5

PBITM (%) 60.2 62.2 66.5 66.6 60.9

PBDTM (%) 83.3 82.6 84.4 79.1 78.0

CPM (%) 63.4 61.1 61.7 55.8 57.3

APATM (%) 40.1 40.7 43.4 42.6 39.7

ROCE (%) 52.6 45.6 41.1 43.1 47.6

RONW (%) 35.1 29.8 26.8 27.6 35.9

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PE 24.7 32.6 15.6 33.4 40.2

EBIDTA 1,604.7 1,153.1 854.9 686.8 531.3

DivYield 1.9 1.8 1.5 0.8 0.6

PBV 7.4 8.4 3.7 8.0 8.8

EPS 18.2 13.2 10.7 8.9 37.6

In Case of market capitalisation, Sun TV is the 2nd largest player. PE has also

increased which indicates an expectation of moderate growth by investors.

ROE is the highest in the industry. And also ROCE of SUN TV is maximum as

compare to other players.

Dividend per share & Net Operating Profit has increased in last year 

indicating improvement in cash situations.

Other Ratios have also shown a good growth in last few years.

Current ratio has declined a bit.

Deb. & D/E ratio has shown improvement in capital structure of the co.

Dividend payout ratio has increased .

Increase in EPS & dividend indicates that increase in dividend is more than

increase in EPS this year.

Sales have also increased.

The EV/EBITDA ratio is a relevant ratio for financial analysis. Sun TV NetworkLtd. shows a EV/EBITDA ratio of 6.68 for the next 12 months, which is slightly

lower than the median of its peer group: 6.77 according to this financial

analysis

Sun TV Network Ltd. valuation is consistent with its peer group's.

this ratio is higher than the average of its sector (Broadcasting &

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Entertainment) 6.10 according to this financial analysis Sun TV Network Ltd.

valuation is above its sector.

The total income for the year ended 31st March 2011 registered a handsome

growth of 37.08% at Rs. 19,705.0 millions as against Rs.14,375.2 millions

during the previous year ended 31st March 2010. Profit before taxes grew by

33.34% at Rs. 11,553.2 million as against Rs. 8,664.2 millions in the previous

year. The Profit after tax was higher by 36.10% at Rs.7,722.2 million as

against Rs. 5673.8 million in the previous year after providing for a higher 

provision towards income tax and defered tax of Rs. 3831.0 million for the

year ended 31 st March 2011 inline with higher profits. Company continued to

maintain its leadership position in the market, supported by highly popular 

content and a well - diversified mix of clients (national, regional and local)

cutting across a broad spectrum of products and services resulting in the

continuous growth of advertising and subscription revenue.