Sun TV Network (SUNTV)

FairStock Score: 93/100 — HIGH CONVICTION

Score breakdown: P/E: 2/3 · ROCE: 1/2 · Growth: 0/2 · Dividend: 1/1

Key Financials

Strengths

• Debt/Equity of just 0.01 and free cash flow of ₹599 Cr give the company strong financial flexibility.
• ROCE of 20.40% and ROE of 13.55% indicate capital efficiency and a competitive position.
• Latest quarter net profit of ₹324 Cr on sales of ₹862 Cr implies robust operating margins.
• Dividend yield of 2.32% and 75% promoter holding align management with minority shareholders.
• Piotroski F-Score of 7/9 and Altman Z-Score of 3.04 suggest healthy financials and low distress risk.

Concerns

• Profit growth declined 9.64% while sales grew 8.78%, showing margin compression in the latest quarter.
• Five-year revenue CAGR of just 4.79% makes this a slow-growth, mature business rather than a fast grower.
• Price of ₹625.85 is above Graham Number of ₹516.07, implying a negative margin of safety; DCF intrinsic value of ₹75.66 is dramatically lower.
• High promoter holding of 75% leaves limited free float and requires continued monitoring of related-party transactions.

AI Analysis

Sun TV Network is exactly the kind of business I like to study: a debt-free franchise earning high returns on capital. With negligible debt at 0.01 debt-to-equity, ROCE of 20.40% and ROE of 13.55%, the company demonstrates that it does not need leverage to generate value. It produced free cash flow of ₹599 Cr and pays a 2.32% dividend, so shareholders are paid to wait. The 75% promoter holding suggests owner-operators remain firmly in control. That is the good part. The difficult part is growth and price. Over five years, revenue grew at only 4.79% CAGR; the latest quarter did show 8.78% sales growth, but profit fell 9.64%. This is a mature business, not a fast compounder. My Graham instincts make me focus on price. The Graham Number is ₹516.07, so at ₹625.85 I am paying more than a conservative asset-and-earnings formula supports, with a negative margin of safety. The stated DCF intrinsic value of ₹75.66 is far lower, and while I treat DCF estimates carefully, it reinforces that I must not overpay for quality. Altman Z at 3.04 and Piotroski score of 7/9 reassure me that the company is financially sound; bankruptcy risk is not the issue here. The issue is whether future growth can justify today's price. In the Buffett-Graham framework, a wonderful business can still be a poor investment if bought at too high a price. I would wait for a wider margin of safety, or for evidence that the profit decline is reversing, before committing fresh capital.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer