Maintain 'hold' on Dish TV – TP lowered to Rs.64 - Geojit BNP Paribas Financial Services

- Hold rating on Dish TV is maintained with a lowered target price of Rs.64, as against the earlier target price of Rs.70 over one year.

- TP is lowered because of cut in revenue and EBITDA estimates. This is due to weak net subscriber addition and lowered ARPU guidance.

- The company could add only 0.1 million subscribers in 4QFY12 and this is the lowest net subscriber add in the last four years.

- Net subscribers add growth slowed from 50% in FY11 to 13% in FY12.

- ARPU also declined qoq and ARPU increase looks challenging in the near term because of anticipated increase in competition from digital cable.

- Considering all these factors, revenue estimates for FY13 has been cut by 4% and EBITDA estimates by 1%.

- It seems that digitization is the key catalyst for Dish TV. Deadline for phase 1 digitisation is June 30. Post this deadline, analog cable blackout in the metros could provide the much needed push to digitization.

- DTH is expected to benefit much from digitization but competitive intensity will also be high in the near term as cable operators would try to protect/ acquire subscribers.

- In view of lowered revenue and EBITDA expectations, target price has been cut to Rs. 64 from the earlier estimate of Rs.70.

- Upside risks to the target price is stronger than expected subscriber addition and better than expected EBITDA.

Source : Equity Bulls

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