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Dish TV’s dominance to continue..
Dish TV, the pioneer in the DTH industry, continues to maintain its leadership
with ~30% market share reaching more than 12mn subscribers led by
competitive pricing, strong marketing push and wide distribution network
making it the most commendable player in the DTH Industry. We initiate
coverage on the company with a 'BUY' recommendation on the stock and a
target price of Rs77 (8.4x FY14E EV/EBIDTA).
Subscriber addition to remain strong
Dish TV accounts for 25% of the incremental subscriber additions in the six player
DTH industry which reaches ~41mn subscribers. We believe Dish TV will continue be
at the pole position despite growing competition from DTH players and Digital cable
under the compulsory digitisation scenario. Digitisation will infact help the company
achieve its target subscriber addition. With strong brand power, leadership position
and an extensive distribution network, we expect the subscriber addition pace to
continue. We estimate Dish TV to add 3mn subscribers each in FY13E and FY14E so
as to reach more than 19mn gross subscribers by FY14E (22% CAGR FY11-FY14E).
Earnings momentum gaining strength
Over the last 4yrs, Dish TV has witnessed 50% CAGR in subscriber base and revenue
to manifold from Rs4.1bn in FY08 to Rs14.4bn in FY11(52% CAGR) being largely led
by growing volumes. We expect the earnings momentum to continue with revenue
CAGR of 32% during FY11-FY14E. We believe its operating profits to increase 4x by
FY14E and OPM to expand from 17% in FY11 to 32% in FY14E. We expect PAT to be
Rs2.4bn in FY14E from a loss of Rs1.9bn in FY11.
VALUATIONS & RECOMMENDATION
We believe Dish TV is best placed amongst all DTH players to tap the low penetrated
DTH opportunity. At CMP, the stock is trading at 9x FY13E EV/EBIDTA FY13E and
6.8x FY14E EV/EBIDTA. With digitisation a reality, sustained leadership in its key
markets and clarity in profitability makes Dish TV a very attractive play in the digitisation
space. We initiate coverage on the stock with a ‘BUY’ recommendation and a target
price of Rs77 (8.4x FY14 EV/EBITDA).We have value the stock on average of DCF,
EV/Subscribers and EV/EBITDA (taking Direct TV and Dish Network as peers).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Dish TV’s dominance to continue..
Dish TV, the pioneer in the DTH industry, continues to maintain its leadership
with ~30% market share reaching more than 12mn subscribers led by
competitive pricing, strong marketing push and wide distribution network
making it the most commendable player in the DTH Industry. We initiate
coverage on the company with a 'BUY' recommendation on the stock and a
target price of Rs77 (8.4x FY14E EV/EBIDTA).
Subscriber addition to remain strong
Dish TV accounts for 25% of the incremental subscriber additions in the six player
DTH industry which reaches ~41mn subscribers. We believe Dish TV will continue be
at the pole position despite growing competition from DTH players and Digital cable
under the compulsory digitisation scenario. Digitisation will infact help the company
achieve its target subscriber addition. With strong brand power, leadership position
and an extensive distribution network, we expect the subscriber addition pace to
continue. We estimate Dish TV to add 3mn subscribers each in FY13E and FY14E so
as to reach more than 19mn gross subscribers by FY14E (22% CAGR FY11-FY14E).
Earnings momentum gaining strength
Over the last 4yrs, Dish TV has witnessed 50% CAGR in subscriber base and revenue
to manifold from Rs4.1bn in FY08 to Rs14.4bn in FY11(52% CAGR) being largely led
by growing volumes. We expect the earnings momentum to continue with revenue
CAGR of 32% during FY11-FY14E. We believe its operating profits to increase 4x by
FY14E and OPM to expand from 17% in FY11 to 32% in FY14E. We expect PAT to be
Rs2.4bn in FY14E from a loss of Rs1.9bn in FY11.
VALUATIONS & RECOMMENDATION
We believe Dish TV is best placed amongst all DTH players to tap the low penetrated
DTH opportunity. At CMP, the stock is trading at 9x FY13E EV/EBIDTA FY13E and
6.8x FY14E EV/EBIDTA. With digitisation a reality, sustained leadership in its key
markets and clarity in profitability makes Dish TV a very attractive play in the digitisation
space. We initiate coverage on the stock with a ‘BUY’ recommendation and a target
price of Rs77 (8.4x FY14 EV/EBITDA).We have value the stock on average of DCF,
EV/Subscribers and EV/EBITDA (taking Direct TV and Dish Network as peers).
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