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Dish TV India (DSTV.BO)
Buy Equity Research
Weak 3Q; but strong 2012 outlook as digitization timeline approaches
What's changed
Following our channel checks, we reduce our 3Q revenue/EBITDA
assumptions for Dish TV as we believe the subs additions for 3Q are
weaker than our expectations. This coupled with continued INR
depreciation has led to higher-than-expected impact on EBITDA (as several
line items are in foreign currency), interest expense and mark-to-market
forex loss. Accordingly, our 3QFY12E revenue/normalized net income
decrease from Rs5.2bn/Rs26mn to Rs5.1bn/-Rs140mn. We therefore do not
expect Dish TV to turn net profit positive in 3Q and also see downside risks
to the company’s net adds and exit ARPU FY12 guidance. Our FY12 net
adds/exit ARPU estimates are 2.6mn/Rs158 vs. guidance of 3.0mn-
3.5mn/Rs160-Rs165. Despite the digitization ordinance being passed, we
have not seen any significant consumer inclination to move towards
digital cable from analog and believe we will see higher net adds for DTH
industry closer to phase 1 of the digitization deadline (June 2012).
Implications
Our FY13E/14E revenue/EBITDA estimates decline by c.1%-2% as we factor
in the weaker subs/higher costs. Accordingly, we lower our FY13E/14E EPS
estimates to Rs1.13/Rs3.00 from Rs1.17/Rs3.16 and reduce our 12-month
DCF-based target price to Rs90 (from Rs95).
Valuation
We reiterate Buy on Dish TV as we consider it well positioned to benefit
from mandatory digitization and estimate it to show a FY11-14E
revenue/EBITDA CAGR of 30%/64%. Although we believe the overhang of
potential dilution may remain for a while (given the company’s intention to
raise up to US$200mn), we do not think Dish TV will raise equity at its
current price (stock down 19% in last 3 months vs. Sensex down 5%) and
would likely look for better valuation given improving fundamentals.
Key risks
Further depreciation of INR vs. USD; Slower DTH uptake/digitization.
INVESTMENT LIST MEMBERSHIP
Asia Pacific Buy List
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Dish TV India (DSTV.BO)
Buy Equity Research
Weak 3Q; but strong 2012 outlook as digitization timeline approaches
What's changed
Following our channel checks, we reduce our 3Q revenue/EBITDA
assumptions for Dish TV as we believe the subs additions for 3Q are
weaker than our expectations. This coupled with continued INR
depreciation has led to higher-than-expected impact on EBITDA (as several
line items are in foreign currency), interest expense and mark-to-market
forex loss. Accordingly, our 3QFY12E revenue/normalized net income
decrease from Rs5.2bn/Rs26mn to Rs5.1bn/-Rs140mn. We therefore do not
expect Dish TV to turn net profit positive in 3Q and also see downside risks
to the company’s net adds and exit ARPU FY12 guidance. Our FY12 net
adds/exit ARPU estimates are 2.6mn/Rs158 vs. guidance of 3.0mn-
3.5mn/Rs160-Rs165. Despite the digitization ordinance being passed, we
have not seen any significant consumer inclination to move towards
digital cable from analog and believe we will see higher net adds for DTH
industry closer to phase 1 of the digitization deadline (June 2012).
Implications
Our FY13E/14E revenue/EBITDA estimates decline by c.1%-2% as we factor
in the weaker subs/higher costs. Accordingly, we lower our FY13E/14E EPS
estimates to Rs1.13/Rs3.00 from Rs1.17/Rs3.16 and reduce our 12-month
DCF-based target price to Rs90 (from Rs95).
Valuation
We reiterate Buy on Dish TV as we consider it well positioned to benefit
from mandatory digitization and estimate it to show a FY11-14E
revenue/EBITDA CAGR of 30%/64%. Although we believe the overhang of
potential dilution may remain for a while (given the company’s intention to
raise up to US$200mn), we do not think Dish TV will raise equity at its
current price (stock down 19% in last 3 months vs. Sensex down 5%) and
would likely look for better valuation given improving fundamentals.
Key risks
Further depreciation of INR vs. USD; Slower DTH uptake/digitization.
INVESTMENT LIST MEMBERSHIP
Asia Pacific Buy List
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