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Dish TV -Strongest ever subscriber addition…
Dish TV reported its Q3FY11 consolidated results that were better than
our estimates. The company reported a topline of | 373.2 crore (I-direct
estimate of | 350.1 crore) higher than our expectations, growing 26.5%
YoY and 8.1% QoQ. The EBITDA margin at 17.9% improved by a
staggering 1329 bps YoY on the back of high operating leverage kicking
in. EBITDA for the quarter stood at | 66.7 crore. Net loss for the quarter
was at | 44.3 crore as compared to | 45.2 crore in Q2FY11 and | 75.1
crore in Q3FY10. The company reported a higher-than-expected loss
partly due to upfront payment for opening up a new LC, which bloated
the interest cost by about | 8 crore. Interest expense for the quarter
stood at | 22.5 crore as against | 13.1 crore in the last quarter.
ƒ Highlights for the quarter
Dish TV reported highest ever net adds in the quarter at 1.1 million
subscribers (0.8 million added in Q2FY11), taking the active
subscriber base to 7.7 million. The company also managed to grow
its ARPU by 2.2% to | 142, even in the scenario of attractive offers in
the backdrop of the festive season. DTH subscription revenues grew
14.3% QoQ to | 310 crore as against | 270 crore in Q2FY11.
The subscriber acquisition cost increased to | 2133 from | 2083 in
Q2FY11 due to higher advertisement and high subsidy due to
intense competition. The company also signed a long-term contract
for additional transponders on Asiasat, enabling it to offer the
highest number of channels.
Valuation
Given the strong subscriber addition and robust anticipated demand we
have revised our estimates upwards. Assuming revenue CAGR of 30.2%
over FY11E–FY20E and terminal growth of 4.5% thereon, we have arrived
at a target price of | 70/share. The stock is currently trading at | 61. Our
target price implies an upside potential of 15%. We rate the stock as BUY.
Result Analysis
ƒ Key metrics – heading northwards
Dish TV added highest ever 1.1 million subscribers as compared to
0.77 million and 0.55 million in Q2FY11 and Q3FY10, respectively.
The huge subscriber addition was on the back of robust demand
during the festive season. The company added more than 0.5
million subscribers in November itself. The upcoming ICC World
Cup and IPL season 4 would aid the company in maintaining high
net adds in the coming quarters. We expect the company to add 3.5
million subscribers in the current fiscal.
ƒ ARPU trend
ARPU during the quarter improved 2.2% QoQ to | 142 from | 139 in
the last quarter primarily due to a favourable pack mix due to
increasing traction in middle level subscription packs over the base
pack.
Increased VAS usage and higher additions on the HD platform
would support ARPU, going forward. We still estimate the ARPU
conservatively and expect it to increase marginally, going forward.
The management is bullish and expects ARPU to be at | 155 by the
end of FY11E.
Outlook & Valuations
Outlook
Dish TV reported highest ever net addition indicating growing preference
for digital cable. Television Audience Measurement (TAM) has also
increased the proportion of digital houses as a percentage of total C&S
homes from 8% earlier to 15% now. We expect the robust addition in
subscribers to continue with the government’s thrust on digitisation. The
company has also opened up a new LC to order higher number of set top
boxes (STB) to keep pace with strong anticipated demand during the ICC
World Cup and IPL Season 4. However, with increasing competition,
subscription acquisition cost may remain firm in the near future.
Given the healthy subscriber addition in the industry and high share of
Dish TV in net adds at 28.4% in 9MFY11, we have revised our subscriber
estimates for both the industry and the company in FY11E and FY12E. We
expect addition of 12.6 million (earlier estimate of 11.3 million) and 13.3
million (earlier estimate of 12.0 million) for the DTH industry and 3.5
million (earlier 2.9 million) and 3.3 million (earlier 3.0 million) subscribers
for Dish TV for FY11E and FY12E, respectively.
Valuation
DCF-based target price of | 70/share
Given strong subscriber addition and robust anticipated demand we have
revised our estimates upwards. Assuming revenue CAGR of 30.2% over
FY11E–FY20E and terminal growth of 4.5% thereon, we have arrived at a
target price of | 70/share. The stock is currently trading at | 61. Our target
price implies an upside potential of 15%. We rate the stock as BUY.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Dish TV -Strongest ever subscriber addition…
Dish TV reported its Q3FY11 consolidated results that were better than
our estimates. The company reported a topline of | 373.2 crore (I-direct
estimate of | 350.1 crore) higher than our expectations, growing 26.5%
YoY and 8.1% QoQ. The EBITDA margin at 17.9% improved by a
staggering 1329 bps YoY on the back of high operating leverage kicking
in. EBITDA for the quarter stood at | 66.7 crore. Net loss for the quarter
was at | 44.3 crore as compared to | 45.2 crore in Q2FY11 and | 75.1
crore in Q3FY10. The company reported a higher-than-expected loss
partly due to upfront payment for opening up a new LC, which bloated
the interest cost by about | 8 crore. Interest expense for the quarter
stood at | 22.5 crore as against | 13.1 crore in the last quarter.
ƒ Highlights for the quarter
Dish TV reported highest ever net adds in the quarter at 1.1 million
subscribers (0.8 million added in Q2FY11), taking the active
subscriber base to 7.7 million. The company also managed to grow
its ARPU by 2.2% to | 142, even in the scenario of attractive offers in
the backdrop of the festive season. DTH subscription revenues grew
14.3% QoQ to | 310 crore as against | 270 crore in Q2FY11.
The subscriber acquisition cost increased to | 2133 from | 2083 in
Q2FY11 due to higher advertisement and high subsidy due to
intense competition. The company also signed a long-term contract
for additional transponders on Asiasat, enabling it to offer the
highest number of channels.
Valuation
Given the strong subscriber addition and robust anticipated demand we
have revised our estimates upwards. Assuming revenue CAGR of 30.2%
over FY11E–FY20E and terminal growth of 4.5% thereon, we have arrived
at a target price of | 70/share. The stock is currently trading at | 61. Our
target price implies an upside potential of 15%. We rate the stock as BUY.
Result Analysis
ƒ Key metrics – heading northwards
Dish TV added highest ever 1.1 million subscribers as compared to
0.77 million and 0.55 million in Q2FY11 and Q3FY10, respectively.
The huge subscriber addition was on the back of robust demand
during the festive season. The company added more than 0.5
million subscribers in November itself. The upcoming ICC World
Cup and IPL season 4 would aid the company in maintaining high
net adds in the coming quarters. We expect the company to add 3.5
million subscribers in the current fiscal.
ƒ ARPU trend
ARPU during the quarter improved 2.2% QoQ to | 142 from | 139 in
the last quarter primarily due to a favourable pack mix due to
increasing traction in middle level subscription packs over the base
pack.
Increased VAS usage and higher additions on the HD platform
would support ARPU, going forward. We still estimate the ARPU
conservatively and expect it to increase marginally, going forward.
The management is bullish and expects ARPU to be at | 155 by the
end of FY11E.
Outlook
Dish TV reported highest ever net addition indicating growing preference
for digital cable. Television Audience Measurement (TAM) has also
increased the proportion of digital houses as a percentage of total C&S
homes from 8% earlier to 15% now. We expect the robust addition in
subscribers to continue with the government’s thrust on digitisation. The
company has also opened up a new LC to order higher number of set top
boxes (STB) to keep pace with strong anticipated demand during the ICC
World Cup and IPL Season 4. However, with increasing competition,
subscription acquisition cost may remain firm in the near future.
Given the healthy subscriber addition in the industry and high share of
Dish TV in net adds at 28.4% in 9MFY11, we have revised our subscriber
estimates for both the industry and the company in FY11E and FY12E. We
expect addition of 12.6 million (earlier estimate of 11.3 million) and 13.3
million (earlier estimate of 12.0 million) for the DTH industry and 3.5
million (earlier 2.9 million) and 3.3 million (earlier 3.0 million) subscribers
for Dish TV for FY11E and FY12E, respectively.
Valuation
DCF-based target price of | 70/share
Given strong subscriber addition and robust anticipated demand we have
revised our estimates upwards. Assuming revenue CAGR of 30.2% over
FY11E–FY20E and terminal growth of 4.5% thereon, we have arrived at a
target price of | 70/share. The stock is currently trading at | 61. Our target
price implies an upside potential of 15%. We rate the stock as BUY.
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