Report
Aliasgar Shakir

MOSL: DISH TV INDIA (Buy)-Subdued quarter- Merger synergies to fuel growth

Dish TV India: Subdued quarter; Merger synergies to fuel growth

(DITV IN, Mkt Cap USD1.2b, CMP INR74, TP INR95, 29% Upside, Buy)

 

  • Subscription revenue disappoints: Dish TV (DITV) reported merged financials post completing the acquisition of Videocon D2H. Revenue for the merged company declined 5% QoQ to INR15.3b, mainly due to a 5% QoQ fall in subscription revenue to INR13.8b. The merged company’s ARPU stood at INR201, with a net subscriber base of 23m (+0.2m QoQ). EBITDA declined 20% QoQ to INR4b, with the margin contracting 470bp QoQ to 26.1%. However, adjusting for the merger expenses (INR600m), EBITDA was down 12% QoQ to INR4.6b, with the adj. margin at 30.1% (-225bp QoQ). PAT stood at INR1.2b (v/s a net loss of INR1.6b in 3QFY18), supported by deferred taxes.
  • Concall highlights: 1) FY19 revenue to grow at 7-8% and EBITDA margin to expand to 34-35% (FY18: 31%). 2) Net subscriber base is expected to increase by 1.3m and gross subscriber base by ~4m. 3) Synergy guidance of INR5.1b is maintained. 4) Capex for FY19 to be in the range of INR12b.
  • Merger synergies to fuel growth: We expect revenue CAGR of 24% over FY18-20, led by (i) a low FY18 base (includes Videocon’s six-month numbers), (ii) 6% growth in net subscriber base, supported by digitization and (iii) 5% ARPU growth, driven by increasing mix of HD subscribers (currently 15%). Management maintained its synergy guidance of INR5.1b (incl. INR3.3b opex synergies). However, given the merged company’s plans to operate both (Dish and Videocon D2H) brands simultaneously with separate sales teams, we believe that the synergy benefits would get prolonged. Subsequently, we build in INR2b synergies in FY19, which should help achieve 280bp EBITDA margin expansion on FY18 adj. EBITDA margin of 30%, reaching 33% by FY19 and 36% by FY20.
Underlying
Dish TV India

Dish TV India is a direct to home (DTH) entertainment service company based in India. Co. is a division of Zee Network Enterprise (Essel Group Venture). EGV has national and global presence with business interests in media programming, broadcasting & distribution, specialty packaging and entertainment. Co. offers DVD quality picture and stereophonic sound effects to customers. Co. transmits programs through satellite and gives customers control of selecting channels and paying for them. Co. offers features such as Electronic Program Guide, parental lock, games, 400 channels, interactive TV and movie on demand. Co. also delivers customers national and international channels.

Provider
Motilal Oswal
Motilal Oswal

​Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance. 

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

Analysts
Aliasgar Shakir

Other Reports on these Companies
Other Reports from Motilal Oswal

ResearchPool Subscriptions

Get the most out of your insights

Get in touch