Hold DEN Networks; target of Rs 124: Edelweiss

Edelweiss' research report on DEN Networks

DEN Networks (DEN) reported in-line revenue and EBITDA for Q1FY18. Key positives:  7.1% QoQ spurt in Phase II net realisation; content cost increased by mere 6.1% QoQ; and EBITDA margin (ex-activation) improved to 13.1% (up by 171bps QoQ). Key negatives: subscription revenue fell 1.9% QoQ, impacted by 6% QoQ decline in realisation in Phase I; and  4.5% QoQ dip in broadband business.

Outlook

At CMP, the stock is trading at 5.4x FY18E and 4.8x FY19E EV/EBITDA. We maintain ’HOLD/SP’ with TP of INR124 (7x FY19E EBITDA).