Sun TV Network ends 22% lower after govt denies security clearance for channels

Shares of Kalanithi Maran-promoted Sun TV Network today tanked nearly 28 percent in intra-day trade following media reports that the union home ministry has denied security clearance to the company’s 33 channels, a move that could result in cancellation of their broadcasting licence.

After opening 10 percent lower, Sun TV stock came crashing down further and breached its 52-week low of Rs 258 before recouping some ground.

Sun TV stock concluded the session at Rs 278.90, down nearly 22 percent from its previous close. Nearly 20 lakh shares changed hands on BSE against two-week daily average volume of 63,000 shares.

Nearly Rs 3,900 crore worth of investor wealth was eroded following the crash.

In the last one year, the stock has crumbled 47 percent from its 52-week high level, while a near 30 percent erosion in stock value seen since the beginning of this year.

Security clearance for the group’s cable TV business has been turned down by the government amid three pending criminal investigations against the company and its owner Kalanithi Maran.

The CBI is investigating the Aircel-Maxis case when former union minister for telecom Dayanidhi Maran was at the helm, followed by an Enforcement Directorate case of money laundering as well as a pending CBI case of an illegal telephone exchange allegedly run from Sun TV’s office.

In view of the current development, foreign brokerage Credit Suisse has downgraded Sun TV to neutral from outperform with a reduced target price to Rs 290 from Rs 450 a share.

Last week, the company in its quarterly earnings announcement reported a 5.45 percent jump in its fourth quarter revenues at Rs 548.58 crore from Rs 520.18 crore registered a year ago period, while net profit rose nearly 3 percent on-year to Rs 203 crore during the quarter under review.