Buy Dish TV - TP Rs.66 - Emkay

Buy, Target Price Rs 66 Digitalization kicker yet to play

Digitization to pump subscriber addition: We estimate 2.3mn and 2mn subscriber addition in FY13E and FY14E. Incremental subscribers from the digitalization would further pump the subscriber addition, Dish TV expects DTH to gain 50% share of 10mn households in Phase-I. Dish TV would benefit the most from digitalization given its strong ~20% share in gross adds in 6 player market.

Revenue and Ebidta growth momentum to continue: On the back of growing ARPU and continued subscriber addition, we expect revenue and Ebidta CAGR (FY12-14E) of 12% and 23%, respectively. We estimate ARPU expansion for Dish TV to happen post first phase of digitization as operators would be offering discounts to gain subscribers and increase their presence in metros (especially Dish TV who has major presence in semi urban and rural markets).

Market leadership to be maintained: Dish TV is market leader in DTH industry with subscriber market share of ~27% and share in gross adds at ~20%. We estimate Dish TV to maintain it leadership position with subscriber market share of 26% by FY14E. Dish TV has highest HD channel capacity (~40 channels) and strong distribution network.

APAT and FCF positive by FY14E: With strong revenue & Ebidta growth and declining capex (trending along with subscriber additions) would lead to profitability and FCF generation in FY14E.

Near term catalyst and earnings performance: Incremental subscriber addition from digitalization with stable churn rate and ARPU improvement are near positives for the stock. We estimate net loss would reduce to Rs250mn in FY13E from Rs1.3bn in FY12 and finally it would turn profitable in FY14E. Maintain positive bias on the stock with DCF based target price of Rs66.

Source : Equity Bulls

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