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Research
Dish TV - Standalone Q3 FY2014 Results - First Cut - Microsec
Posted On : 2014-01-26 08:50:05( TIMEZONE : IST )
Dish TV India Ltd (Dish) announced its standalone Q3 FY2014 results on 23 January 2014. While the company's top line came in line with our as well as Bloomberg consensus estimates, it reported higher than estimated losses during the quarter.
While Dish's top line expanded 3.4% q-o-q to Rs. 612.8 Crores, its losses widened to Rs. 38.3 Crores in Q3 FY2014 compared with Rs. 16.0 Crores in Q2 FY2014. Growth in the company's top line was led by addition of 220 thousand new subscribers and minor improvement in Average Revenues per User (ARPU) to Rs. 166. The subscriber addition, which was slightly lower than our estimates of 240 thousand, led Dish's net user base to 11.2 Mn. While the company's reported ARPU came in line with our estimates, lower than expected subscriber addition kept the revenues a little below our estimates. On EBIDTA front, Dish registered a translational loss of Rs. 7.0 Crores due to exchange fluctuations and a loss of Rs. 5.4 Crores related to exchange rate adjustment demand for transponder payments, which negatively impacted its profitability. However, after eliminating these losses as well, the company's EBIDTA remained below our estimates.
Higher promotional and marketing outgo, coupled with increased sports driven content expenditure kept the EBIDTA below our expectations. The lower than expected performance at EBIDTA level persisted in bottom line as well, where the company reported higher than expected losses in Q3 FY2014. Added to that, a lower other income dragged Dish's bottom line during the quarter. The company reported other income of 9.7 Crores in Q3 FY2014 vis-Ã -vis a comparable amount of Rs. 21.0 Crores in Q2 FY2014. However, Dish's initiatives to repay debt helped it report 12.8% sequential decline in finance costs to Rs. 30.1 Crores, which limited the losses during the quarter.
On operational front, Dish launched first of its kind 'On-Request Ala-carte' (ORA) scheme on its platform aiming at providing a reasonable content cost payout. Moreover, the company repaid debt of Rs. 328.1 Crores in Q3 FY2014, leading the total repayment to Rs. 563.1 Crores during 9M FY2014. The repayment of debt was supported by Dish's ability to continue generating free cash flows from operations, which stood at Rs. 58.3 Crores during the quarter compared with free cash flows of Rs. 66.7 Crores in Q2 FY2014. With the debt repayment of Rs. 328.1 Crores in Q3 FY2014, the company has to repay ~Rs. 230 Crores in the upcoming quarter to achieve its targeted total debt repayments worth $90 Mn in H2 FY2014. In addition, Dish completed successful package based to a-la-carte migration of 22 channels of a content aggregator from 01 January 2014.
Apart from prospected repayment of debt, Dish's bottom line performance is likely to get support from initiatives such as acquisition of additional transponder capacity, on track Sri Lankan project, and the ongoing digitization wave. Considering Dish's free cash flows, ability to cater to the digitization opportunity and innovative steps such as OTT app, we continue to have a positive view on the stock. However, below expected performance during the quarter may lead us to revise our target price downward for the stock.
