Maintain 'buy' on Dish TV – TP maintained at Rs.86 - Geojit BNP Paribas

- Buy rating on Dish TV is maintained with a target price of Rs.86 over one year.

- Dish TV reported a somewhat weak quarter with revenue and EBITDA missing street estimates.

- ARPU increased from Rs.156 to Rs.159. EBITDA margin has been in line with street expectations. But, it does not account for the MediaPro re-negotiations.

- EPS is higher than market estimates driven by change in forex policy.

- As phase1 of digitization deadline of 31 October is approaching, visibility on digitilisation is improving.

- It seems that Dish TV is well positioned to benefit from digitization through ARPU increase, increased subscriber addition and reduced churn pressure.

- Retained the forecast of subscriber for FY13/14 at 2.5 million /3 million despite weak subscriber additions in 1H.

- It seems that Dish TV is a long term structural story for which visibility is improving. The company is expected to benefit as digitisation progresses beyond metros.

- Slightly reduced the revenue and EBITDA estimates for FY13 and retained the target price.

- Content cost agreement with MediaPro is to be signed in 3Q and this is likely to impact the EBITDA Margin in 2HFY13.

- Macro headwinds and delay in competitors' response to Dish TV's price hike impacted subscriber addition in 2QFY13.

- Digitization in Mumbai and Delhi on track; Kolkata could get delayed.

- Marketing costs to increase going forward in view of the festive season as well as the digitization deadline.

- Dish renewed its USD200m fund raising board resolution; however there are no immediate fund raising plans.

- New plan of free 70 FTA (free-to-air) channels is only applicable to new customers in the four metros for now.

Source : Equity Bulls

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