IPL media rights: Sun TV, United Spirits likely to gain Rs 400-500 crore this year

Meanwhile, Sun TV soared as much as 4.26 percent to Rs 437.95 on the BSE. At 11:49 am, the stock was trading at Rs 413.20 apiece on the BSE, down 1.63 percent.

As far as the distribution of money in IPL media rights is concerned, 50 percent of the money stays with the Board of Control for Cricket in India (BCCI), 40 percent is equally divided among all the teams, and the remaining 10 percent gets divided among the top four teams, depending on their positions in the playoffs each year.

Shedding light on Sun TV's gain, Karan Taurani, Senior Vice-President and Research Analyst of Elara Securities, told CNBC-TV18 that 35-40 percent of Sun TV’s market capitalisation could, in fact, be attributed to the IPL team.

“If you do the math, each IPL team's revenue is increasing by 2-2.2 times from the past. The numbers will probably look towards Rs 650-700 crore in terms of revenue and bases, and even the valuations will probably double from Rs 4,000-5,000 crore range," he said.

"If cash is included, then Sun TV's broadcasting business is trading at a very cheap valuation,” Taurani added.

This year Star India won the TV rights for IPL with a winning bid of Rs 23,575 crore, while Viacom 18 bagged the digital rights with a bid of Rs 23,758 crore.

Digital has been the main contributor in pushing the total value for this time’s auction of media rights to Rs 48,390 crore; the jump is massive when compared to last year’s figure, which was a little over Rs 16,000 crore.

As per CLSA, for Star to make money incurred on this, advertising revenue has to grow by 15 percent for the next five years to equate to Disney Star TV’s bid cost. For Viacom 18, meanwhile, 57 percent growth in advertising revenue is needed to match the bid cost.

Analysts at the brokerage also believe that there might be a dip in the 46 million Indian users of Hotstar, who account for 36 percent of overall Disney Plus’ subscribers. The analysts believe the platform could see a 40-50 percent drop in subscriber base on account of them not having digital IPL rights.

UBS believes the results of the auction have been positive for Sun TV. The brokerage house has a 'buy' call on the stock with a target price of Rs 630 per share. On Zee, they have a 'neutral' rating, with a target price of Rs 350 per share.

Disclosure: Viacom18 is part of the Network18 Group which is also the parent company that operates CNBC-TV18.