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Riding on digitisation wave…
Market leader with strong net adds share
• Dish TV is the largest DTH player with a market share of ~31%
and net add share of ~29%
• Majority of the cable and satellite household addition (86 million
in 2008 to 95 million in 2009) were led by DTH, which added
about 6 million subscriber homes in 2009. DTH is expected to
drive the digital cable distribution industry, going forward, as well
• The DTH industry will benefit the most from the government’s
decision to digitise cable distribution throughout India by
December 31, 2013. The DTH industry expected to almost double
in next two years from the current subscriber base of 33.9 million
Going ahead
• Dish TV’s subscriber base of 10.5 million in FY11 is expected to
more than double in the next three years
• The recently launched HD channels have seen a good response.
Share of HD is expected to increase from 7% of net adds
currently resulting in higher ARPU and high operating leverage
• The company is well capitalised to acquire its next 4.0 million
subscribers and is expected to become cash flow positive by
FY13E to fund further acquisitions
• Topline growth would maintain a healthy pace on the back of high
subscriber addition and ARPU expansion
• EBITDA will grow rapidly on the back of high operating leverage
due to fixed price contracts with broadcasters. EBITDA margin will
more than double from current levels within the next two years
• Dish TV would become PAT positive within the next fiscal
Valuation
Being the market leader in a booming industry the stock has fared well
appreciating over 94% in the last 12 months. The company is well
capitalised to fund the next phase of growth. The government’s renewed
thrust on digitisation and positive PAT would be next triggers. We
recommend Dish TV as our top pick in the sector.
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