Buy stocks of Dish TV; target of Rs 79

Dish TV:-

“Dish TV standalone performance was better than our expectations with subscription revenue growth of 4.6% QoQ. Lease rental revenue was lower due to change in accounting policy, which led to flat revenue QoQ. Lease rental revenue stood at Rs460mn v/s 660mn in Q4FY12. 50%/15% QoQ decline in advertisement/other operating expenditure supported EBITDA growth of 8% QoQ to Rs1.55bn. EBITDA margin at 29.9% grew 244bps QoQ. Total loss for the quarter stood at Rs323mn which includes forex loss of Rs138mn. Adj. net loss for the quarter was at Rs 164mn v/s Rs180mn in Q4FY12. On the back of strong EBITDA and lower capex (due to lower subscriber addition), the company reported +ve FCF of Rs400mn v/s Rs430mn in Q4FY12.”

“Dish TV added 0.50mn gross subs v/s our est. of 0.58mn. ARPU during the quarter grew 2.9% to Rs156. SAC during the quarter stood at Rs2145 v/s Rs2127 in Q4FY12. Monthly churn rate remained stable at 1.0%. We estimate gross subscriber addition of 2.3mn for FY13E with ARPU of Rs158 (Q4FY13E ARPU at Rs165). We expect churn rate to remain at current levels going forward.”

“We revise our revenue and EBITDA marginally by 1%-2% for FY13E & FY14E, as our numbers already reflect higher ARPU assumptions. EBITDA margin in coming quarters is expected to decline from current levels due to increase in content cost. Net loss expands led by finance cost and depreciation. Revised net loss for FY13E stands at Rs797mn and PAT for FY14E is expected at Rs401mn. At CMP of Rs71 stock trades at 13.6x/11x EV/EBITDA of FY13E/FY14E. We maintain ACCUMULATE rating on the stock with revised TP of Rs79,” says Emkay Global Financial Services research report.