Dish TV Gets Thumbs Up From Most Brokerages As Earnings Meet Estimates

Most brokerages maintained their rating on the Dish TV stock as the direct-to-home operator’s earnings for the July-September quarter matched estimates.

Dish TV’s operating revenue fell nearly 4 percent to Rs 749 crore, according to a stock exchange notification posted after trading hours yesterday. It reported a net loss of Rs 16 crore for the period as against a profit of Rs 70 crore a year ago.

Subscription revenue growth remained subdued at 2 percent on a sequential basis to Rs 705 crore, resulting in a flat monthly average revenue per user of Rs 149.

Operational efficiency along with marginal revenue expansion led to an improved margin of 170 basis points. Earnings before interest, depreciation and amortisation margins expanded to 28.9 percent from 27.2 percent in the previous quarter.

Merger With Videocon d2h Soon

The company is close to completing its merger with Videocon d2h, the direct-to-home television arm of Videocon Industries Ltd, announced in November 2016.

“...With all other approvals in place, the only approval pending is from the Ministry of Information and Broadcasting. We are optimistic about hearing back from the MIB any moment now and hope to close the merger at the earliest thereafter,” Jawahar Goel, chairman and managing director, Dish TV India Ltd, said in a statement.

“On the synergy front, we stick to our guidance of Rs 180 crore for FY18 and Rs 510 crore for FY19,” he said.

The merger should be complete two-three weeks after the company receives approval from the information and broadcasting ministry, Rajeev Dalmia, chief financial officer, Dish TV had told BloombergQuint in an interaction prior to the earnings announcement. After the merger, the new company—Dish TV Videocon Ltd.—will have 55 percent held by Dish TV and Videocon will have a 45 percent.

Here’s what brokerages had to say on Dish TV post Q2 earnings:

CLSA

• Maintains ‘Buy’, raises target price to Rs 108 from Rs 97.
• Remains positive on Dish TV’s merger with Videocon d2H; synergy realisation to drive further 16 percent upside.
• Expect company to deliver 10 percent ebitda CAGR over FY18-20 pre-merger.
• Concerns on slow recovery in ARPU and subscribers.

Nomura

• Maintains ‘Buy’, raises target price to Rs 97 from Rs 94.
• Expects net subscriber addition of 1-1.1 million over FY18-20.
• Expects ARPU to improve on GST benefit in Q3 & Q4.
• Merger with Videocon d2H merger remains a key catalyst for Dish TV.

B&K Securities

• Maintains ‘Outperformer’ rating, raises target price to Rs 95 from Rs 90.
• Expect incremental recovery in operating metrics.
• Management expects ARPU to improve in Q3/Q4, partly aided by GST.
• Outperformer rating due to share price correction, recovery in ARPU, improved earning visibility and merger with Videocon d2h.

HDFC Securities

• Maintains ‘Buy’ rating, cuts target price to Rs 102 from Rs 105.
• Positive on the back of digitisation, merger with Videocon d2h and inexpensive valuations.
• Materialisation of synergy benefits post-merger is key near-term trigger.
• If it gets favorable ruling from the court on license fee matter, would increase target price by Rs 15.

IDFC Securities

• Maintains ‘Outperformer’ rating with a target price at Rs 95.
• ARPU to improve in H2FY18 led by GST implementation.
• Merger with Videocon d2H to yield both revenue (higher carriage and advertising revenue) and cost synergies.
• Lowering of license fees is key near-term trigger.