Buy Siti Cable Network; target of Rs 52: SPA Research

SPA Research's report on Siti Cable NetworkSITI Cable Network Limited (erstwhile known as Wire and Wireless (India) Ltd) is a leading cable television distribution company with subscriber universe of 10.5mn spread across 130 cities across 17 states. Its cable network is supported by 15 digital head ends and approximately 15,400 kilometers of HFC network. We believe that SCNL will benefit most from phase III & IV of cable TV digitization, driving revenue growth and margin improvement. We initiate coverage on the stock with a BUY recommendation and target price of INR52, based on DCF (FCFE) methodology.SCNL will emerge as one of the prime beneficiary of cable digitization and consolidation of MSOs with SCNL's pay-TV market share improving to ~14% by FY20E from 10.5% in FY15 and ARPU improving by 3.5x.With the formation of Comnet, SCNL is better placed compared to its competitors in managing content cost in-line with growth in ARPU. SCNL has aggressive target of acquiring 2mn broadband subscriber by FY18E and plans to transform itself into broadband company by 2020. While the target is stretched, we believe that there will be significant traction in broadband business given SCNL's focus and its better control of LCOs. Going forward, steady growth in pay-TV & Broadband subscriber base coupled with improvement in subscription revenue will instill investor confidence in the stock. We initiate coverage on the stock with a BUY recommendation and target price of INR52, based on DCF (FCFE) methodology. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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