Accumulate Dish TV India; target of Rs 71: PLilladher

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Accumulate Dish TV India; target of Rs 71: PLilladher

Prabhudas Lilladher is bullish on Dish TV India and has recommended accumulate rating on the stock with a target of Rs 71 in its January 19, 2012 research report.

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Prabhudas Lilladher is bullish on Dish TV India and has recommended accumulate rating on the stock with a target of Rs 71 in its January 19, 2012 research report.

"Dish TV reported revenues of Rs4.9bn (up 2% QoQ), EBITDA of Rs1.2bn (EBITDA margin of 24.5% v/s 25.3% in Q2FY12) and adjusted PAT loss of Rs274m (PAT loss of Rs182m in Q2FY12). PAT is adjusted for forex loss of Rs156m."

"Dish TV reported muted subscriber additions of 0.74m (0.58m in Q2FY12; 1.14m in Q3FY11) owing to significant reduction in demand after the festive season in October. The monthly churn rate has spiked to ~1.5% in the quarter, driven by aggressive competition. Dish has lowered its FY12 sub-additions guidance to ~2.7m. ARPU disappointed, remaining flat QoQ at Rs152, leading to a muted revenue growth. Dish has re-negotiated the content deals with Sony and Neo, driving content costs higher by ~Rs100m QoQ. Content costs for 9MFY12 have grown 19% YoY. With the remaining deals coming up for re-negotiation in FY13, margins will remain under pressure."

"SAC at Rs2,124 was lower by 5% QoQ as the distribution commissions decreased, following the inventory build-up in Q2FY12 in the run-up to the festive season. The management has maintained the ad-spend guidance at ~Rs900m (Rs529m spent in 9MFY12), leading to an increased SAC in Q4FY12 as the rest of the budget is consumed. The increased churn, resulting from the aggressive competition will impact subscriber additions and profitability, leading to pressure on per sub breakeven. The higher ad-spends in Q4FY12 will also push margins lower. The weakening INR v/s USD will also see Dish TV absorbing rising set-top box costs. Consequently, we reduce our FY13E EV/EBITDA-based target price to Rs71 (Rs77). We reduce the stock to 'Accumulate'," says Prabhudas Lilladher research report.

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