Supreme Court order would further strengthen Sun TV’s dominance in south India

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Supreme Court order would further strengthen Sun TV’s dominance in south India
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The Supreme Court has ordered the renewal of phase III license of Red FM, a unit of Digital Radio Broadcasting, which is an associate company of Sun TV Network. This has provided a much needed break, one that was long anticipated by the media company based in the southern India.

In the coming future, this renewal could lead to a potential re-rating of the company's stock.

However, before being loyal to Sun TV's stock for a long time, there are two main factors that investors need to keep in mind. First of all, several facts about the company's operations reassure that its financials are healthy, with its revenues and net profits’ continuous growth of 11% and 41% to Rs 568 crore and Rs 218 crore, respectively, in the September 2015 quarter. Good advertising and subscription revenues had a major role in this growth.

Second thing, it would potentially benefit from Indian government’s digitisation. As per the estimates, digital cable subscriptions had a major part in Sun's subscription revenues growing nearly 20% on the average in the past three years.

Also, in south India, approximately 25 million cable homes are not digitised, and since Sun TV network is dominant there, it will surely see reasonably good growth in the subscriptions revenues.
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