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Buy Den Networks; target of Rs 220: Ventura

Ventura is bullish on Den Networks and has recommended buy rating on the stock with a target of Rs 220 in its November 16, 2012 research report.

November 17, 2012 / 01:13 PM IST
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Ventura is bullish on Den Networks and has recommended buy rating on the stock with a target of Rs 220 in its November 16, 2012 research report.

“Den Networks reported strong set sets of numbers during the quarter with 23.9% YoY top-line growth in its cable business led largely by consolidation of acquired JVs. Consolidated revenues were at Rs 216.09 crore during the current quarter. It is to be noted that consolidated top-line is not comparable with corresponding period of previous year due to the change in accounting policy at Media Pro which has started reporting revenues on a net basis (Gross revenues – Cost of Distribution rights). Moreover, the company has been able to save on operating costs (66% v/s 72.2% of sales) for the second quarter in a row (in cable business) which has lead to significant improvement in margins by 540 bps YoY (22.9% v/s 17.5%). Consequently, consolidated EBITDA and PAT were at Rs 49.6 crore (+59.2% YoY) and Rs 16.4 crore (+112% YoY) respectively.”

“During the quarter, company added over ~4,00,000 more set top boxes taking its total set top box universe to ~2.4 mn with majority of the additions in Delhi and Mumbai. We remain upbeat on the company as the company has analog network of over 3.75 mn subscribers in Phase II cities and is likely to convert a significant portion. The company has a strong analog presence in Phase II cities across Uttar Pradesh, Maharashtra, Gujarat, Karnataka, Rajasthan and Haryana. Den Networks Ltd has allocated ESOPs to employees in March, 2011 and as a result would amortise the ESOP premium over the next three years. As a result, the company has amortised Rs 0.81 crore during the quarter.”

“Digitization is a reality now as analog signals in Delhi and Mumbai has been switched off (as per Phase-I deadline of 30th Oct, 2012) without any major hiccups. Given that MSO’s are expected to be the biggest beneficiaries of digitisation, we believe Den Networks Ltd is well placed to reap the benefits of digitisation on the back of its strong subscriber revenue base of ~11 mn and aggressive management team. At a CMP of Rs 180, the stock is trading at 31.5x and 25.9x its FY13 and FY14 earnings estimates and we recommend a BUY on the stock with DCF based target price of Rs 220 (~20.8% upside potential),” says Ventura research report. 

Non-Institutions holding more than 90% in Indian cos

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To read the full report click on the attachment

first published: Nov 17, 2012 12:18 pm

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