Moneycontrol
Aug 18, 2017 10:46 AM IST | Source: Moneycontrol.com

Analysts cut target but remain positive on Dish TV despite net loss in Q1

The positive stance was due to future outlook and synergy gains from Videocon merger. The stock rallied as much as 6 percent in early trade Friday.

 
 
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Analysts slashed target price of Dish TV after posting net loss in Q1 but retained positive stance due to future outlook and synergy gains from Videocon merger. The stock rallied as much as 6 percent in early trade Friday.

CLSA cut its target price to Rs 97 (from Rs 112 earlier) after lowering FY18-19 EBITDA (earnings before interest, tax, depreciation and amortisation) estimates by 10-11 percent but remained positive on the stock with buy rating.

The research house said Q1 numbers were encouraging with recovery in ARPU (average revenue per user) and subscription revenue.

The company expects net synergies from Videocon D2H merger at Rs 5,100 crore and that to drive company's profitability, CLSA said.

Dish TV believes, going forward, ARPUs should get a tailwind as major MSOs have started adopting the prepaid model for revenue collection. Direct collection should help correct certain anomalies in the business model of MSOs, thus helping lift overall industry ARPUs.

IDFC Securities also slashed target price on Dish TV to Rs 92 from Rs 112 following cut in FY18/19 EBITDA estimates by 7.3/7.7 percent but expects ARPU upmove, which has begun, to sustain for the next three quarters.

Bucking the trend of the last two quarters, Dish TV's operating revenue grew 4.3 percent QoQ (down 5.1 percent YoY) to Rs 740 crore (3 percent beat), Motilal Oswal said while maintaining buy rating on the stock with a target price of Rs 106 (implying 43 percent upside).

The fading impact of demonetisation drove subscription revenue by 11.5 percent QoQ (down 5 percent YoY) to Rs 692 crore, steered by healthy 10 percent QoQ jump in ARPU to Rs 148 (4 percent beat) and net adds of 1.86 lakh (up 12.7 percent QoQ, reaching net subscriber base of 15.7 million), it added.

Despite the recovery in ARPU in Q1FY18, EBITDA grew 5.6 percent QoQ (down 23 percent YoY) to Rs 201 crore, with the margin at 27.2 percent (up 35 basis points QoQ, down 630bp YoY). This was mainly due to an increase in content cost and marketing expenses QoQ, which offset the impact of 22 percent reduction in transponder costs.

Dish TV posted consolidated net loss of Rs 13.9 crore in Q1, which reduced from Rs 29.1 crore in previous quarter. It had reported profit of Rs 36.1 crore in year-ago period.

"We have largely maintained our revenue and EBITDA estimates, factoring in margin recovery in FY18, led by content cost reduction and synergy gains from merger," Motilal Oswal said while maintaining buy rating on the stock with a target price of Rs 106.

At 10:44 hrs Dish TV India was quoting at Rs 76.90, up Rs 3.05, or 4.13 percent. It touched an intraday high of Rs 78.30 and an intraday low of Rs 72.90.
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