Citi maintains 'buy' on Dish TV, target Rs 77

Moneycontrol Bureau

Brokerage house Citi has maintained its ‘buy' rating on Dish TV as it believes the disappointment in average revenue per user (ARPU) numbers in Q4 will be partly offset by lower churn to subscriber acquisition cost (SAC) and good cost control measures.

“There could be some pressure on consensus estimates given the ARPU disappointment, which should partly be offset by lower churn/SAC, good cost control etc. We had upgraded the stock to 'Buy' earlier in the year and maintain our positive view. Dish TV remains our top pick in the Indian media space,” said the Citi note to clients.

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“Our target price of Rs 77 is based on 12x Mar14E enterprise value to earnings before interest, tax, depreciation and amortization (EV/EBITDA). The multiple is justified given the growth potential of the business, management focus on profitability and the expected FCF generation over the next 12-18 months. Our target price is supported by Discounted Cash Flow (DCF) based methodology, which gives a fair value per share of Rs 77,” said the Citi note.