SENSEX NIFTY
Jan 23, 2013, 12.44 PM IST | Source: Moneycontrol.com

Buy Dish TV India; target of Rs 85: KRChoksey

KRChoksey is bullish on Dish TV India and has recommended buy rating on the stock with a target of Rs 85 in its January 23, 2013 research report.

KRChoksey is bullish on Dish TV India and has recommended buy rating on the stock with a target of Rs 85 in its January 23, 2013 research report.
 
“Dish TV’s Q3FY13 net sales was in line with our expectation however margins disappointed as operational cost and depreciation increased in the quarter. The company reported net sales of Rs 558crs, a growth of 4.4% QoQ driven by higher subscriber base and increase in ARPU. EBITDA stood at Rs 155crs, declined by 5.3% over sequential quarter as content cost increased. Consequently EBITDA margins fell by 290bps QoQ to 27.8%. Excluding exceptional gains in Q2FY13, the company reported loss of Rs 45crs as compared to loss of 21crs in Q2FY13. Phase I of digitization and festive season in the quarter led to robust growth in subscriber addition in the quarter. Entry level base price hike taken has resulted in uptick in ARPU. We believe Dish TV will outperform its industry peers in terms of new subscriber addition going ahead. Healthy subscriber addition and higher ARPU will drive strong revenue growth. Although increase in content cost due to renewal of contracts will dent EBITDA margins in FY13E, we believe cost rationalization at operating level will help to improve margins in FY14E.Maintain BUY.”
 
“Dish TV reported 4.4% QoQ growth in net sales driven by increase in subscriber base and higher ARPU. Subscriber growth showed impetus as a result of digitization in Phase I and ongoing Phase II. Dish TV added 0.8mn subscribers in the quarter at gross level and o.5mn subscribers at net level. In spite of increase in subscriber base, ARPU inched up from Rs 159 in Q2FY13 to Rs 160 in Q3FY13. Strong subscriber base and increase in ARPU will boost revenues going ahead. Increase in content cost due to renewal of contracts with distributors and other operating expenses dented EBITDA margin by 290bps QoQ to 27.8%. The management has guided 12% increase in content and programming cost for FY13. However lower subscriber acquisition cost will help to improve operating margin.”
 
“Dish TV reported another steady revenue growth quarter. Impact of digitization is visible in robust growth in subscriber addition. The company reported increase in ARPU in spite of higher subscriber base. We believe new subscriber addition will continue as digitization progresses, considering Dish TV’s wide reach and strong brand in DTH space. Healthy growth in ARPU and increase in net subscriber base due to reduced churn will boost revenues. At current price, the stock is trading at 16.3x and 11.7x EV/EBITDA to its FY13E and FY14E earnings. We maintain BUY on Dish TV with a target price of Rs 85,” says KRChoksey research report.

FIIs holding more than 30% in Indian cos

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