Brokerages Maintain Dish TV’s Rating On Strong First Quarter Earnings 

Most brokerages maintained their ratings on Dish TV India Ltd., as the direct-to-home television operator posted better-than-expected earning numbers for the April-June quarter.

Dish TV’s operating revenue increased 8 percent sequentially to Rs 1,656 crore beating estimates, according to an exchange filling after trading hours yesterday.

It, however, reported a fall of 77 percent in net profit at Rs 28 crore as against a profit of Rs 121 crore in the January-March 2018 period, which fell short of BloombergQuint’s consensus estimates of analysts of Rs 36.8 crore. An IDFC report attributed this to a high tax write back in the base number, while Nomura said it was due to high interest costs. Apart from this, the company performed well on all parameters:

• Operating profit rose 39 percent to Rs 556.7 crore, also above estimates.
• Margin expanded to 33.6 percent from 26.1 percent in the previous quarter.
• Total subscription revenue increased 8.8 percent to Rs 1,489 crore.

Here’s what brokerages had to say on Dish TV post Q1 earnings:

Goldman Sachs

• Maintain ‘Neutral’ with a target price of Rs 76 –an upside potential of 4 percent.
• Despite strong average revenue per user, remain uncertain on sustainability of such ARPU.
• Availability of cheap data and launch of Reliance JioGigaFiber to put pressure on industry.
• Upside risk: Higher-than-expected benefit from new tariff order, less competition from free-to-air and merger synergies.
• Downside risk: Higher content cost, entry of new players in Pay TV, availability of online content, delay in merger synergies.

Bank of America- Merrill Lynch

• Maintain ‘Buy’ with a target price of Rs 90 -an upside potential of 23 percent.
• Strong results with revenue/earnings before interest, tax, depreciation and amortisation beating estimates after 3-4 quarters.
• Company well placed to deliver strong margins led by synergy benefits.
• Find valuations cheap in-context of growth.

Kotak Securities

• Maintain ‘Add’; revised target price to Rs 90 from Rs 84-an upside potential of 23 percent.
• ARPU growth recovery commences.
• Raise FY19-21 Ebitda estimates by 3-4 percent.
• Content cost synergies yet to be realised; to further boost profitability.
• Target multiple factors in Reliance Jio risk and potential payout of Rs 200 crore for license fees.
• Consistency in performance to drive further upgrades and re-rating.

Macquarie

• Maintain ‘Outperform’ with a target price of Rs 98- an upside potential of 36 percent.
• After disappointing last five quarters; strong result beats estimate on both subscription and Ebitda.
• Sustained improvement in margins will remain key monitorable.
• Price hike at a time of uncertainty around Freedish, proves competitiveness of Dish TV.
• Rural focus to be a safeguard against any competition from Jio GigaFiber.
• Timely accrual of Videocon d2H merger synergies key trigger for stock.

Nomura

• Maintain ‘Neutral’ rating with a target price of Rs 80- an upside potential of 9.5 percent.
• Good results with revenues/Ebitda beating estimate due to merger synergies.
• Lower net profit due to sharp increase in interest cost.
• Sustainability of ARPU remains a key watch; given a substantial jump of 33 percent in interest cost.