Dish TV (Buy, PO Rs97) 􀂄 BofA Merrill Lynch,

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Dish TV (Buy, PO Rs97)
􀂄 We see limited impact to earnings from macro headwinds given nearly 85%
revenue from subscription income. In the worst case, we expect churn to
increase which could impact EBITDA by about 10%. ARPU expansion is on
track. Dish further raised pricing for its entry-level schemes for new
subscribers.
􀂄 We expect subscription revenue to jump 2x over FY11-14E, led by growth in
its subscriber base. We see EBITDA CAGR of 54% over FY11-14E, driven
by subscriber growth and ARPU expansion.
􀂄 We believe Dish is on track for a turnaround in net profit by 4Q FY12E and
FCF by FY13E. We expect Dish is well placed to fund growth vs. peers given
that peers are likely to reel under losses for at least 2-3 more years.
􀂄 The recent correction is driven by concerns on fund raising. Even assuming
that the entire amount is raised at current prices and there are no benefits
from the fund raising, we expect equity dilution to be about 13-14%. Our fair
value could reduce to Rs87, with still 27% potential upside.
􀂄 The stock trades at 11x our EV/EBITDA FY13E vs. the historical band of 12-
18x. Our DCF-based PO implies EV/EBITDA of 16x at marginal premium to
implied multiples for broadcasting peers given the strong EBITDA growth and
margin expansion.