4QFY14 EBITDA below estimates led by higher opex: DITV’s 4QFY14 EBITDA
declined 11% QoQ to INR1.29b (vs estimate of INR1.55b). Subscription revenue
remained flat QoQ at INR5.64b, impacted by lower no of days in the quarter. Opex
grew 6% QoQ on year-end adjustments towards set-top box write-off etc.
Change in accounting policy boosts reported EBITDA: DITV amended its revenue
recognition policy towards customer premise equipment activated up to March
2012. This resulted in higher revenue/EBITDA by INR370m/INR333m in 4QFY14
(part of reported revenues) but a one-time prior period exceptional loss of
INR1.16b. DITV also changed its accounting policy for activation revenue
recognition which boosted 4QFY14 revenue/EBITDA by INR111/INR100m.
Excluding the EBITDA impact of change in accounting policy and ~INR180m cost
impact due to higher set-top box write-offs, 4QFY14 EBITDA would have been
~INR1.04b as per our estimates. Our FY14 revenue/EBITDA numbers exclude the
impact of prior period items but include the positive impact due to accounting
policy change in activation revenue for the current year (which is recurring item).
Subscriber momentum strong; ARPU increase to be driven by rate hikes: DITV
added 0.23m net subscribers in 4QFY14, up 3% QoQ despite seasonal weakness.
Management indicated that monthly gross additions have accelerated to
200k/month in the current quarter as compared to ~INR120k/month during FY14.
Announced rate hikes for high-end packs lend visibility to ARPU increase in FY15.
Estimates largely unchanged; maintain Buy
Our EBITDA and PAT estimates are largely unchanged despite the 4QFY14 miss as
change in accounting policy would boost the FY15/16 revenue by ~INR500m.
We expect EBTDA growth to rebound from 5% decline in FY14E to 23% CAGR over
FY14-16E led by 10% net subs CAGR, 6% ARPU CAGR, and 350bp EBITDA margin
expansion (primarily content cost leverage).
DITV trades close to multi-year low valuations with EV/EBITDA of 10.3x FY15 and
7.6x FY16. Maintain Buy with a DCF based target price of INR70/sh (unchanged).
declined 11% QoQ to INR1.29b (vs estimate of INR1.55b). Subscription revenue
remained flat QoQ at INR5.64b, impacted by lower no of days in the quarter. Opex
grew 6% QoQ on year-end adjustments towards set-top box write-off etc.
Change in accounting policy boosts reported EBITDA: DITV amended its revenue
recognition policy towards customer premise equipment activated up to March
2012. This resulted in higher revenue/EBITDA by INR370m/INR333m in 4QFY14
(part of reported revenues) but a one-time prior period exceptional loss of
INR1.16b. DITV also changed its accounting policy for activation revenue
recognition which boosted 4QFY14 revenue/EBITDA by INR111/INR100m.
Excluding the EBITDA impact of change in accounting policy and ~INR180m cost
impact due to higher set-top box write-offs, 4QFY14 EBITDA would have been
~INR1.04b as per our estimates. Our FY14 revenue/EBITDA numbers exclude the
impact of prior period items but include the positive impact due to accounting
policy change in activation revenue for the current year (which is recurring item).
Subscriber momentum strong; ARPU increase to be driven by rate hikes: DITV
added 0.23m net subscribers in 4QFY14, up 3% QoQ despite seasonal weakness.
Management indicated that monthly gross additions have accelerated to
200k/month in the current quarter as compared to ~INR120k/month during FY14.
Announced rate hikes for high-end packs lend visibility to ARPU increase in FY15.
Estimates largely unchanged; maintain Buy
Our EBITDA and PAT estimates are largely unchanged despite the 4QFY14 miss as
change in accounting policy would boost the FY15/16 revenue by ~INR500m.
We expect EBTDA growth to rebound from 5% decline in FY14E to 23% CAGR over
FY14-16E led by 10% net subs CAGR, 6% ARPU CAGR, and 350bp EBITDA margin
expansion (primarily content cost leverage).
DITV trades close to multi-year low valuations with EV/EBITDA of 10.3x FY15 and
7.6x FY16. Maintain Buy with a DCF based target price of INR70/sh (unchanged).
