Accumulate Dish TV; target Rs 96: Emkay

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Accumulate Dish TV; target Rs 96: Emkay

Emkay Global Financial Services is bullish on Dish TV and has recommended accumulate rating on the stock with a target price of Rs 96 in its October 19, 2011 research report.

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Emkay Global Financial Services is bullish on Dish TV and has recommended accumulate rating on the stock with a target price of Rs 96 in its October 19, 2011 research report.

"Dish TV, net loss for the quarter expanded to 486mn due to Rs304mn of forex loss pertaining to its USD denominated debt of Rs7.5bn. EBITDA improved 8.6% qoq on account of strong revenue growth and lower programming and content exp. (declined 6.3% qoq). Revenue stood at Rs4.8bn up 4.8% qoq, lower than our est. of Rs4.9bn. ARPU improved sequentially to Rs152 v/s Rs150. Subscriber edition declined to 0.57mn v/s 0.73 in Q1FY12. EBITDA improvement to continue, profitability on track. Valuations at 16.8x and 12.3x EV/EBITDA of FY12E and FY13E, resp.

Dish TV standalone performance was in but forex loss dragged the bottom-line during the quarter. Subscription revenue was at Rs4.1bn (our est. of Rs4.2bn) up 5.2% qoq. Selling & distribution exp includes pre-booking expenses to the tune of Rs180mn out of which ~Rs140mn would be written back in next quarter. Despite of higher one-time exp in the quarter, company reported strong EBITDA of Rs1.2bn. EBITDA margin at 25.3% improved 90bps qoq. Total loss for the quarter stood at Rs486mn which includes forex loss of Rs304mn. Adj. loss for the quarter was at Rs181mn v/s 183mn in Q1FY12.

Dish TV added 0.57 million subscriber v/s our expectation of 0.68 million. ARPU during the quarter improved to Rs152 v/s Rs150 in Q1FY12 and HD ARPU was at Rs454. SAC during the quarter increased to Rs2232 v/s 2058 in last quarter. Subscriber market share stood at ~24% for H1FY12. We have revised our estimates for subscriber addition for FY12E to 2.9mn v/s 3.0mn earlier, given the moderation in H1FY12. EBITDA for the quarter at Rs1.2bn improved 8.6% qoq with EBITDA margin improving 90bps to 25.3%. The improvement was led on the back of lower programming and other cost which declined 6.4% qoq. However, the company has charged ~Rs180mn in other expenditure as pre-booking expenses during the quarter, had not been charged EBITDA would have been robust. We est. EBITDA margin of 26.9% /28.7% for FY12E /FY13E.

Subscriber addition has seen significant moderation, however management maintains its guidance of 3.0mn -3.5mn subscriber addition for FY12E. We feel the guidance is optimistic and we have cut our estimate on subscriber addition from 3.0mn to 2.9mn (it has added 1.3mn in H1FY12). Our ARPU estimate for FY12E stands at Rs151.4. Management has guided for reversal of Rs140mn charged in current quarter for prebooking exp. and cut in the ad expenditure for current fiscal from Rs1.1bn to Rs850mn would support the incremental improvement in H2FY12E. We have revised our EBITDA estimates upwards for FY12E by 3.6%. Net loss estimate for FY12E stands at Rs564mn, it's higher on account of Rs304mn forex loss. Maintain ACCUMULATE on the stock with revised target price of Rs96. At CMP of Rs77 stock trades at 16.8x /12.3x EV/EBITDA of FY12E / FY13E, respectively," says Emkay Global Financial Services research report.

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