Dish TV India -Bring the cup Direct-to-Home :: Target Rs76: Macquarie Research,

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Dish TV India
Bring the cup Direct-to-Home
Event
 The Cricket World Cup fever should hit a crescendo with today’s India vs
Pakistan semi-final match. Our channel checks at retail shops, selling DTH
connections, indicate sales have risen at a brisk pace over the past week.
 We believe Indian Dish TV will surprise positively on the gross add target of
3.5m in FY11. The company has been raising its gross addition target through
the year, given the strong customer pull the DTH players have been
witnessing. Expect subscriber addition data for March (due next week) to act
as a positive catalyst.

Impact
 Subscriber addition target has been raised progressively… Dish TV has
successively raised its subscriber addition target for the year – starting from
2.5m in May 2010 to the current 3.5m announced in February. Figure 1
captures the uptick in guidance. Our FY12 subscriber addition estimate of
2.8m has clear upside risks and we would re-assess these with quarterly
results due next month.
 ... buoyant performance by ‘Men in Blue’ accelerating the pace. We
visited 10 retail stores (admittedly small sample size) over the last week to
gauge the pace of DTH subscriber addition and were encouraged by our
findings. These visits reinforced our conviction in Dish beating its subscriber
addition target for FY11.
 HD launched in 4Q but will take time to show in ARPU performance. This
quarter we saw the foray of all the leading DTH players in the High Definition
(HD) channel offerings (See Fig 2-5). The monthly subscription for this
package is Rs450 vs. lowest priced offer available at Rs160 at Dish TV. It is
early to ascertain the impact of HD offering on blended ARPU and we would
wait before factoring this into our estimates. (See Figure 2-4)
Earnings and target price revision
 No change.
Price catalyst
 12-month price target: Rs75.00 based on a DCF methodology.
 Catalyst: Quarterly Results and Sub Addition numbers for 4Q
Action and recommendation
 Reiterate Outperform. The stock is at 17x FY12 EV/EBITDA (for 100%
growth in FY12 EBITDA) and is fast approaching positive FCF inflection point.
Dish TV remains our top pick in the media space.