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Reduce Den Networks, recommends Emkay

Emkay Global Financial Services has recommended a reduce rating on Den Networks in its November 21, 2013 research report.

November 25, 2013 / 06:09 PM IST
 
 
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Emkay's research report on Den Networks



  • Consolidated revenue at Rs 2719mn (+29 percent yoy and +1.2 percent qoq), EBITDA at Rs 845mn (+95.4 percent yoy and +17 percent qoq) and PAT at Rs 111mn (-28.2 percent yoy and +10.2 percent qoq).
  • Subscription growth at 24 percent qoq to Rs 991mn was led by improved collection in digitized markets. Activation revenue declined 53 percent qoq on account lower box seeding.
  • Delays in CAF collection and implementation of package pricing due LCO resistance would continue to delay investment monetization in near-to-medium term.

"Although seeding of boxes has successfully been undertaken in Phase-I and II, consumer billing has been delayed because of continued resistance from LCOs. The company claims to have collected CAF (consumer acquisition form) for most of its subscribers in Phase I, which would drive consumer billing from Q4FY14E. We believe the continued resistance from LCOs would delay 100 percent consumer billing in the near term. Our estimate already discount consumer billing from FY15E. In our view, the stock price is already discounting the best case execution. ARPU growth in Phase-I and II, coupled with a better-than-expected pick-up in broadband in the medium term, would be the key risk to our call. Maintain REDUCE with target price of Rs 140," says Emkay Global Financial Services research.

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first published: Nov 25, 2013 06:09 pm

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