Buy Den Networks: Ventura

Ventura's research report on Den Networks

"Den Networks, as per MIB's latest data, cable TV MSO's have seeded ~71 percent of the digitized market (11.78 mn STBs out of 16.59 mn STBs) which reiterates our expectations of MSO's getting the major pie of analog subscribers' base. Given that MSO's are expected to be the biggest beneficiaries of digitisation, we believe Den Networks Ltd is well placed to reap the benefit on the back of its strong subscriber revenue base of ~11 mn and aggressive management team. Further, we believe that the next leg of growth is likely to come from monetizing the digital subscriber base via starting billing on gross basis by Q3FY14E. Also, with not much significant costs being associated with the incremental revenues, the profitability should be positively affected. Given the potential multifold growth via likely improvement in ARPUs coupled with probable addition of subscribers' to the tune of ~6 mn (i.e. from ~5 mn to 11 mn by FY15E) in Phase III and IV, we maintain a BUY on the stock. At the CMP of Rs 213, the stock trades at 24.3x and 22.8x FY14 and FY15 EPS," says Ventura Securities research report.

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