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Guidance lowered
Dish TV posted disappointing Q3FY12 results on the back of lower subscriber
addition, high churn and flat ARPU along with higher cost. This led to lower
sequential margins and high forex losses reducing profitability. We believe
mandatory digitisation would help the company to add subscribers while the
ARPU would grow marginally going forward. Maintain Buy.
Disappointing results: Dish TV reported 31.4% YoY (1.7% QoQ) growth in
revenue to Rs4905mn while operating profit grew by 80% YoY (down 1.4%
QoQ) to Rs1201mn. It reported a loss of Rs430mn against Rs478mn in Q3FY11.
Lower subscriber addition, high churn, high commission expenses and
Rs1156mn forex loss impacted the results.
Guidance lowered: Management has reduced its FY12 gross subscriber
addition guidance from 3-3.5mn to 2.7mn on the back of reduced free viewing
period and increased entry level price coupled with tough macro
environment. In 9MFY12 the company added 2mn subscribers with 0.74mn in
Q3FY12 itself. The company has also lowered its ARPU guidance from Rs160-
165 to Rs155 on the back of lower package upgrades from subscribers, lower
subscription of sports packages and high churn.
Weak operating matrix: Management maintained that the industry had a
tough quarter on subscriber addition due to price hikes which impacted
numbers while churn was high due to the economic slowdown. ARPU too
remained flat during the quarter while it is expected to increase on the back of
price hike in entry level packages. SAC reduced to Rs2124 following lower
selling and distribution expenses. Content cost increased marginally to 33% of
subscription revenues after the renewal of contract with Sony and Neo Sports
during the quarter while Zee Network and Star Network contacts would come
up for renewal next year. Lease rental too reduced by Rs100mn on a
sequential basis as 5-year-old subscribers were not paying rentals and also
because rentals have reduced from Rs2200 to Rs500 currently.
Estimates lowered; Maintain BUY: We have cut our FY12/FY13 estimates
factoring in lower subscriber growth, higher churn, low rental revenues,
higher than expected forex losses and higher commission. Hence we have cut
our revenue/ebidta estimates by 3.8%/6.8% and 5.4%/6.3% for FY12 and FY13
respectively. However, we maintain BUY rating on the stock with a target price
of Rs75 (12x FY13E Ev/Ebidta) and believe Dish TV would be one of the key
beneficiaries of digitization.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Guidance lowered
Dish TV posted disappointing Q3FY12 results on the back of lower subscriber
addition, high churn and flat ARPU along with higher cost. This led to lower
sequential margins and high forex losses reducing profitability. We believe
mandatory digitisation would help the company to add subscribers while the
ARPU would grow marginally going forward. Maintain Buy.
Disappointing results: Dish TV reported 31.4% YoY (1.7% QoQ) growth in
revenue to Rs4905mn while operating profit grew by 80% YoY (down 1.4%
QoQ) to Rs1201mn. It reported a loss of Rs430mn against Rs478mn in Q3FY11.
Lower subscriber addition, high churn, high commission expenses and
Rs1156mn forex loss impacted the results.
Guidance lowered: Management has reduced its FY12 gross subscriber
addition guidance from 3-3.5mn to 2.7mn on the back of reduced free viewing
period and increased entry level price coupled with tough macro
environment. In 9MFY12 the company added 2mn subscribers with 0.74mn in
Q3FY12 itself. The company has also lowered its ARPU guidance from Rs160-
165 to Rs155 on the back of lower package upgrades from subscribers, lower
subscription of sports packages and high churn.
Weak operating matrix: Management maintained that the industry had a
tough quarter on subscriber addition due to price hikes which impacted
numbers while churn was high due to the economic slowdown. ARPU too
remained flat during the quarter while it is expected to increase on the back of
price hike in entry level packages. SAC reduced to Rs2124 following lower
selling and distribution expenses. Content cost increased marginally to 33% of
subscription revenues after the renewal of contract with Sony and Neo Sports
during the quarter while Zee Network and Star Network contacts would come
up for renewal next year. Lease rental too reduced by Rs100mn on a
sequential basis as 5-year-old subscribers were not paying rentals and also
because rentals have reduced from Rs2200 to Rs500 currently.
Estimates lowered; Maintain BUY: We have cut our FY12/FY13 estimates
factoring in lower subscriber growth, higher churn, low rental revenues,
higher than expected forex losses and higher commission. Hence we have cut
our revenue/ebidta estimates by 3.8%/6.8% and 5.4%/6.3% for FY12 and FY13
respectively. However, we maintain BUY rating on the stock with a target price
of Rs75 (12x FY13E Ev/Ebidta) and believe Dish TV would be one of the key
beneficiaries of digitization.
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