Sun TV Network Ltd., a regional Indian satellite broadcaster, tumbled on speculation the government will cancel its license amid reports the home ministry denied security clearance to 33 of its channels.
Shares of the Chennai-based company plunged 22 percent to 278.65 rupees in Mumbai, the biggest loss since June 2011, according to data compiled by Bloomberg.
India’s Ministry of Home Affairs rejected a proposal from the Ministry of Information and Broadcasting for the security clearance, citing legal cases pending against members of the network’s founding family, the Press Trust of India reported over the weekend.
“We have no communication from any government official and in the absence of any written communication, I can’t say anything at all,” S.L. Narayanan, chief financial officer at the Sun Group said in an e-mail.
Chaitanya Prasad and K.S. Dhatwalia, spokesmen at the Ministry of Information and Broadcasting and Home Ministry, declined to comment.
Credit Suisse Group AG cut the stock to neutral from outperform, and slashed its one-year price target by 36 percent to 290 rupees, saying risk from legal cases is much higher than anticipated.
“The continuing negative news flow is likely to dampen investor sentiment severely,” UBS AG said in a note, maintaining its buy rating. “The risk to our thesis is that Sun TV channels go off air, which is unlikely in our view.”
Shares of Sun TV have slid 35 percent in the past 12 months, compared with a 4.4 percent gain in the benchmark S&P BSE Sensex.