Accumulate Dish TV; target of Rs 79: Emkay

“Dish TV, subscriber addition during the start of the quarter was weak due to 1) price hike of Rs200 in start-up pack and 2) seasonally weak quarter. However, management indicated that from august subs addition has increased led by aggressive marketing and launch of SD recorder box. Subs run-rate for Q2FY13E remains inline with last quarter run-rate of 0.5mn. HD subscriber addition is at 7% of incremental additions with Dish TV’s share at 25% of HD market. Dish TV has 3.5mn inactive subscribers out of its total subscriber base of 13.4mn at the end of Q1FY13. Management expects 35% of these inactive subscribers would reactivate the boxes to save one-time STB cost. Activation of these subscribers would be positive for Dish TV.”

“Dish TV has recently launched SD-DVR (Dish+) in 42 cities going for digitization in the Phase I and II. SD-DVR comes with unlimited recording facility and priced at Rs1690 v/s Rs5990 for HD recorder offered by the competition. Dish+ has got excellent response so far and the management believes it will take a while for competition to replicate the product. Aggressive ad campaigns across the media platforms and first mover advantage in SD recorder box would drive subscriber addition during digitalization. ARPU growth would continue in FY13E with major increase to be seen in Q4FY13E. Dish TV has increased prices across the packages, which would support the ARPU growth. Management has not seen down trading from the high-end packs to base packs due to hike in package prices. Dish TV maintains its exit ARPU guidance of Rs163. Management believes there is still scope for hike in tariff, but it would happen in FY14E.”

“The stock has recently rallied recently on the back of hike in FDI limit for the sector and government’s strong intent to stick to 31st October digitization deadline for metros. However, we continue to maintain our positive view on the company and maintain accumulate rating on the stock,” says  Emkay Global Financial Services research report.

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