The superhit success of the recent Rajinikanth starrer ‘Jailer’ movie is expected to give a major boost to Sun TV’s profits for the ongoing quarter – according to a report by Nuvama Research, a Mumbai-based broking firm.
Sun Pictures' blockbuster movie 'Jailer' continues to have a great run at the box office, collecting more than Rs 6 billion worldwide and surpassing the Rs 60 crore gross mark in Karnataka.
The movie has been breaking box office records and has collected more than Rs 600 crore worldwide. becoming only the second Tamil film after '2.0' to achieve this feat.
Jailer, which features Rajinikanth as a hardened prison officer dealing with challenges in his personal and professional life, has been a huge success even in its third week
“Sun Pictures, like other TV broadcasters, is also likely to see a steady increase in ad revenues and subscriptions. Any value unlocked in its IPL Team could be an additional trigger for the stock to re-rate," Nuvama Research's report said.
Three months ago, the broker had correctly predicted a strong performance by Sun TV based during the April-June quarter, predicting that the success of the IPL or Indian Premier League, would boost its profits. The broker had then estimated the income from IPL at around Rs 513 crore, while the cost was only Rs 228 crore, thus boosting the company’s profit (EBITDA).
“Now, with the phenomenal success of the movie 'Jailer', produced by Sun Pictures and starring superstar Rajinikanth, we expect a boost in Q2FY24 numbers as well,” Nuvama said in its latest report.
Indeed, the stock has seen a sharp run-up in the last two months, boosted by both the strong numbers of the Apr-Jun quarter as well as the success of Jailer.
Sun TV shares have gained nearly 40% in two months, and are being traded at Rs 619.50 today.
Nuvama said it expects further gains from the IPL franchise. The company owns the 'Sunrisers Hyderabad' IPL team, which became the second team to get knocked off from the IPL that was conducted in March-May this year.
“We expect the revenue contribution from the cricket franchise to rise substantially in the coming years, further supported by more revenue from movie distribution. SUN's business model is robust and has helped the company build strong cash flows,” it added maintaining a BUY status.
However, it needs to continue to push against broadcasters and expand across regions to gain market share. SUN's foray into the North needs to be more focused, and it needs to ramp up its OTT presence by creating originals and obtaining movie rights for its OTT platform.