Buy Dish TV : price target of Rs 80 in next 24 months :Anand Rathi

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Dish TV                                                          Price   53                                                   Target   80

The Business

Dish TV India is an Essel Group venture. The group has national and global business interests, including media programming, broadcasting and distribution, specialty packaging and entertainment.

Dish TV is India's first direct-to-home entertainment service, which has digitized Indian entertainment to bring home the best in television viewing through the latest in digital technology. It takes television viewing to the next level as it supports various futuristic features such as electronic programme guides, parental locks, capacity up to 400 channels, games, interactive TV, movie on demand, etc. It also brings to India exclusive national and international channels for the first time.

The only pure-play listed DTH company in India, it is promoted and led by Indian media pioneer Subhash Chandra, chairman, the Essel group.

It has an all-India selling and distribution network through dealers/ distributor networks, modern retail outlets, direct selling agents, home delivery and others.

Investment Rationale

~ Consistent market leader with highest absolute share

~ Stabilizing ARPU (average rate per user)

~ Capitalizing on the industry growth and regulatory approvals (digitization mandate) – opportunity for DTH to enter cable strongholds

~ Management guidance revised to “Cautious with a positive bias”

~ Turnaround on cards, though with a delay

Valuations

At present, the company is suffering losses at the net level though it has a positive cashflow from operations. Management had guided to positive free cashflow from Q4 FY12. Fewer subscriber additions due to keener competition and a higher churn rate might delay this to H1FY13.

Its competitive edge and mandatory digitization policy by the government would prove catalysts for the company. At present, the stock is close to its 52W low; we see a price target of Rs 80 in next 24 months

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