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Jan 23, 2012, 12.55 PM IST
PINC Research is bullish on Dish TV India and has recommended buy rating on the stock with a target price of Rs 72 in its January 19, 2012 research report.
“Dish TV’s top-line was below our expectations registering a growth of 1.7%QoQ to reach Rs 4.9bn (PINCe Rs 5.2bn) led by gross subscriber addition of 0.74mn in Q3FY12. ARPU remains stable at Rs 152. Content cost as a percentage of revenue increased from 39% in Q2FY12 to 41% in Q3FY12 mainly because of renewed content deals with Sony and Neo Sports. EBITDA margin declined sequentially from 27.8% in Q2FY12 to 24.5% in Q3FY12. Forex loss of Rs 156mn led to net loss of Rs 430mn for the quarter.”
“The company added 0.74mn (25% incremental market share) subscribers in Q3FY12 taking the gross subscriber base to 12.5mn with net subscriber base of 9.5mn. Net Subscriber as % of gross subscriber reduced from 78% in Q2FY12 to 76% in Q3FY12 reflecting higher churn.The subscriber addition for the quarter was lower because of sharp hike in price at entry level by increasing STB price by 30% to Rs 1590. The company has revised the subscriber addition downwards from 3mn to 2.7mn for FY12 (~0.7mn gross subscriber addition in Q4FY12). ARPU for the quarter was flat at Rs 152 in Q3FY12. SAC decreased to Rs 2124 in Q3FY12 (Rs 2232 in Q2FY12). EBITDA declined to Rs 1.2bn from Rs 1.3bn in Q2FY12 resulting OPM to decline by 83bps QoQ to 24.5% in Q3FY12. The decline was mainly due to higher content cost at 32% of revenue due to renewal of content deals with Sony and Neo Sports and increased advertising expense by 6% sequentially. Forex loss of Rs 156mn was reported as a result of rupee depreciation on foreign currency debt led to loss of Rs 433mn for Q3FY12.”
“We believe Dish TV is best placed amongst all DTH players to tap the low penetrated DTH opportunity. Incorporating lower subscriber addition, increased content cost as a result of renewal of deals, we have reduced our earnings estimate for FY12E, FY13E and FY14E with net loss of Rs 1.17bn (from Rs 1.05bn) in FY12 and PAT of Rs 995mn (from Rs 1.13bn) and Rs 2.2bn (from Rs 2.4bn) in FY13E and FY14E respectively. At CMP, the stock is trading at 9.3x FY13E EV/EBIDTA FY13E and 7.1x FY14E EV/EBIDTA. We reiterate our BUY recommendation on the stock with a revised target price of Rs 72 (8.2x FY14 EV/EBITDA). We have valued the stock on average of DCF, EV/Subscribers and EV/EBITDA,” says PINC Research report.
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