Dish TV - 4QFY12 Results Update - Motilal Oswal

Dish TV's 4QFY12 EBITDA grew 60% YoY and 20% QoQ to INR1.44b. While subscription revenue growth (+2% QoQ) remained muted for second consecutive quarter, EBITDA growth was largely driven by higher lease rental and other revenues.

- EBITDA margin improved 300bp QoQ to 27.5%. EBITDA ex lease rental grew 4% QoQ to INR0.78b (15% of rev).

- Net loss increased 32% YoY and 14% QoQ to INR490m despite lower forex loss (INR65m in 4QFY12 v/s INR156m in 3QFY12) as there a one-time additional depreciation costs of ~INR300m booked during the quarter.

- Revenue grew 7% QoQ to INR5.25b, primarily led by higher lease rental income (+47% QoQ to INR660m) and "other" revenues (+26% QoQ).

- Subscription revenue grew 2% QoQ (likely lowest ever) to INR4.3b largely led by 2% increase in net subscriber base to 9.6m and flat ARPU at INR151.

- Gross adds at 0.42m declined 44% QoQ - lowest in ten quarters. Gross sub base increased ~3% QoQ to 12.9m.

- Monthly churn rate (based on net subscribers) declined to ~0.9% per month (~0.27m subscribers churned during the quarter) vs 1.1-1.6% in previous three quarters.

- Weak macro environment has been impacting subscriber additions as well as ARPU (due to continued downtrading by subscribers) for DITV.

- Management expects FY13 gross adds for the DTH industry at 8-9m excluding the impact of digitization. Digitization opportunity in phase I is estimated at ~7m of which DTH operators could gain upto 50%.

- Meaningful uptick in ARPU is unlikely in the current environment given that most DTH operators/MSOs will focus on "subscriber grab" to take advantage of the mandatory digitization schedule.

- We are downgrading our revenue and EBITDA estimates by 2-4% and TP by ~10% given weak subscriber additions and ARPU outlook.

- The stock trades at EV/EBITDA of 10.4x FY13E and 8.2x FY14E. Maintain Neutral with a target price of INR58/sh (INR65/sh earlier).

Source : Equity Bulls

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