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India Equity Research Reports, IPO and Stock News
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India media sector
View from the buy side: Roadshow
feedback
Event
Investor interest in the Indian media sector remains high even in current
volatile markets. We got little pushback on our thesis of DTH players scoring
over the cable companies in the sector. Reiterate Dish TV as our preferred
pick and advise caution on Zee.
Impact
Dish TV – is it all in the price? Investors felt that the growth story driving the
investment thesis on the stock is well understood and this is what they
believed would see the stock appreciate from these levels. We believe the
favourable industry dynamics imply that the company’s EBITDA growth would
remain in double digits even three years from now. As such, current
valuations still have room to move up as the company continues to ride the
secular growth curve in the distribution space.
Cable companies – what does the future hold? The sharp YTD stock price
corrections of 50% and 77% in the two leading cable operators – Hathway
(HATH IN, Rs84, Not rated) and Den Networks (DEN IN, Rs41, Not rated)
have tempted value investors. We would be less interested in these names
since we see a structural decline in the business as digitisation is likely to
pressure carriage and placement revenues. We think the regulatory push
towards digitalization by 2014 as mandated by TRAI remains key.
Zee: Sit out the downgrade cycle. Investors were interested in hearing our
anti-consensus call on Zee. The street EPS estimates have already come
under pressure (FY12 cut by 8% and FY13 cut by 7%) post the flat YoY ad
revenues reported by the company in 1Q. Recent strength in the fiction show
ratings for Sony could aggravate the pain for Zee and result in further
earnings downgrades. We are 7% below street for FY13E EPS and would
advise taking a position once the downgrade cycle has played out.
Sun TV: Re-visiting the business fundamentals. Most investors hold the
view that the company is unlikely to see a sharp deterioration in business
fundamentals post the change in the Tamil Nadu state government. Even so,
the key worry on the name remains potential fall-out of the 2G telecom scam
on the company and an end to uncertainty associated with the case.
Print names: Exciting rural story but limited takers. The leading print
players in the Hindi space present an interesting way to play the rising
consumption of Tier 2 and 3 cities in India. Even so, limited free float and thin
trading volumes restrict the interest in the space.
Outlook
Recommend switching from Zee to Dish. We believe investor expectations
for a sharp ARPU jump for Dish have started to moderate and we recommend
adding the stock. We would wait out for the earnings downgrade cycle for Zee
and keep a close eye on the fiction show ratings of Sony before turning more
constructive on Zee.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India media sector
View from the buy side: Roadshow
feedback
Event
Investor interest in the Indian media sector remains high even in current
volatile markets. We got little pushback on our thesis of DTH players scoring
over the cable companies in the sector. Reiterate Dish TV as our preferred
pick and advise caution on Zee.
Impact
Dish TV – is it all in the price? Investors felt that the growth story driving the
investment thesis on the stock is well understood and this is what they
believed would see the stock appreciate from these levels. We believe the
favourable industry dynamics imply that the company’s EBITDA growth would
remain in double digits even three years from now. As such, current
valuations still have room to move up as the company continues to ride the
secular growth curve in the distribution space.
Cable companies – what does the future hold? The sharp YTD stock price
corrections of 50% and 77% in the two leading cable operators – Hathway
(HATH IN, Rs84, Not rated) and Den Networks (DEN IN, Rs41, Not rated)
have tempted value investors. We would be less interested in these names
since we see a structural decline in the business as digitisation is likely to
pressure carriage and placement revenues. We think the regulatory push
towards digitalization by 2014 as mandated by TRAI remains key.
Zee: Sit out the downgrade cycle. Investors were interested in hearing our
anti-consensus call on Zee. The street EPS estimates have already come
under pressure (FY12 cut by 8% and FY13 cut by 7%) post the flat YoY ad
revenues reported by the company in 1Q. Recent strength in the fiction show
ratings for Sony could aggravate the pain for Zee and result in further
earnings downgrades. We are 7% below street for FY13E EPS and would
advise taking a position once the downgrade cycle has played out.
Sun TV: Re-visiting the business fundamentals. Most investors hold the
view that the company is unlikely to see a sharp deterioration in business
fundamentals post the change in the Tamil Nadu state government. Even so,
the key worry on the name remains potential fall-out of the 2G telecom scam
on the company and an end to uncertainty associated with the case.
Print names: Exciting rural story but limited takers. The leading print
players in the Hindi space present an interesting way to play the rising
consumption of Tier 2 and 3 cities in India. Even so, limited free float and thin
trading volumes restrict the interest in the space.
Outlook
Recommend switching from Zee to Dish. We believe investor expectations
for a sharp ARPU jump for Dish have started to moderate and we recommend
adding the stock. We would wait out for the earnings downgrade cycle for Zee
and keep a close eye on the fiction show ratings of Sony before turning more
constructive on Zee.
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