Buy SITI Networks; target of Rs 52: SPA Research

SPA Research's research report on SITI Networks

SNL reported muted set of numbers due to delay in monetization of phase 3 subscribers, no improvement in phase 1 & 2 realization and lower activation revenue. On the positive side, broadband revenue more than doubled YoY and grew 28% QoQ on back of strong subscriber addition of 28,000. SNL reported revenue of INR 2.89bn, up 23.4% YoY supported by higher activation and broadband revenue. It seeded 0.4mn STBs in Q2FY17 and has inventory of 1.4mn STBs. EBIDTA (ex-activation) for Q2FY17 was down 61% YoY to INR 90mn. Monetization of phase 3 subscribers is expected to start from Q4FY17 with ARPU ranging between INR60-65. SNL has already signed content deals for phase3/4 areas on fixed fee basis. We maintain our BUY recommendation with DCF based target price of INR 52.