Sun TV shares tank over 20% on security issue

Market capitalisation of stock dived by over Rs 3,000 cr

Sun TV shares tank over 20% on security issue

The cup of woes never seems to be ending for Kalanithi Maran and his group companies. Shares of Sun TV tanked over 20 per cent on Monday following reports that all channels of Sun TV are likely to go off air after reports that Home Ministry denied security clearance to the channels.

The scrip of Sun TV opened at Rs 320.80 on the National Stock Exchange (NSE) as against the closing price of Rs 356.40 on Friday. It had an intra-day low of 257.45 before recovering a little bit and finally closing at Rs 279.50 with volumes of over 1.48 crore shares. The market capitalisation of the stock tanked by over Rs 3,000 crore in a single day following the fall in the stock price.

A clarification by Sun TV did not do much to stop the free fall in the stock. “We wish to state that no communication has been received by the company with regards to denial of clearance to Sun TV by the Ministry of Home Affairs from any ministry and all our channels continue to be on air,” Sun TV had informed the exchanges.

Pending legal cases
Domestic airline company SpiceJet, which was taken over by Kalanithi Maran, was sold back to its original promoter Ajay Singh as it was facing losses for last 4-5 quarters.
Following the legal overhang on the stock, brokerages also seemed very cautious over the stock.

“We reckon if the Information and Boradcasting Ministry were to go by the MHA decision and deny security clearance to Sun, it is likely to get a stay on the decision from the courts but should the group get conviction in any of the pending legal cases, Sun could end up losing its licence,” Credit Suisse said in a note.

“We downgrade Sun TV to a neutral from outperform as the risk from the legal cases is now much higher than anticipated as there could be concerns on Sun TV continuing its business. We cut our target price to Rs 290 from Rs 450. We prefer Zee TV in the space,”  Credit Suisse added.
 

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