Dish TV - ICICI Direct

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Feb 4, 2016 ... Dish TV reported its Q3FY16 numbers with revenues at | 771.5 crore, ... Dish TV ended FY15 with 12.9 million net subscribers, up from 11.4.
Result Update February 4, 2016

Dish TV (DISHTV)

Rating matrix Rating Target Target Period Potential Upside

: : : :

Hold | 87 12 months 8%

Subscriber addition, ARPU disappoint…

What’s changed? Target EPS FY16E EPS FY17E EPS FY18E Rating

Changed from | 115 to | 87 Changed from | 2.2 to | 2.4 Changed from | 3.1 to | 3.2 Introduced at | 3.8 Unchanged

Quarterly performance Revenue EBITDA EBITDA (%) PAT

Q3FY16 771.5 265.5 34.4 68.5

Q3FY15 YoY (%) 713.9 8.1 191.2 38.8 26.8 763 bps (2.9) NA

Q2FY16 QoQ (%) 752.4 2.5 255.0 4.1 33.9 52 bps 86.9 -21.2

Key financials | Crore Net Sales EBITDA Net Profit EPS (|)

FY15 2,773 733 3 0.0

FY16E 3,055 1,028 258 2.4

FY17E 3,455 1,182 345 3.2

FY18E 3,933 1,347 409 3.8

FY15 2745.4 2,952.5 13.2 (27.5) NM 15.4

FY16E 33.4 35.9 9.2 (156.6) NM 41.0

FY17E 25.0 26.9 7.8 29.8 119.0 42.7

FY18E 21.1 22.7 6.4 12.3 58.6 40.3

Valuation summary P/E Target P/E EV / EBITDA P/BV RoNW RoCE

Stock data Particular Market Capitalization

Amount 8,622.3

Total Debt (FY15) Cash (FY15)

1,483.9 428.6

EV 52 week H/L Equity capital Face value

9,677.6 121 / 58 106.6 1.0

Price performance Dish TV Hathway Cable

1M -24.4 -17.4

3M -25.6 -10.7

| 81

6M -33.0 -27.1

12M -5.9 -42.3

Research Analysts Bhupendra Tiwary [email protected] Sneha Agarwal [email protected]

ICICI Securities Ltd | Retail Equity Research



Dish TV reported its Q3FY16 numbers with revenues at | 771.5 crore, up 8.1% YoY, slightly lower than our expectation of | 783.3 crore. ARPU during the quarter came in at | 172 vs. | 171 in Q2FY16 (our expectation - | 173.3), resulting in subscription revenues at | 711.1 crore. The subscriber addition (net) was tepid at 0.32 million vis-à-vis other DTH peers Airtel DTH Videocon D2H. The net subscriber base was at 14 million at the end of the quarter • EBITDA came in at | 265.5 crore vs. our expectation of | 258.6 crore, up 38.8% YoY. Margins came in at 34.4% (vs. our estimate of 33%), aided by lower programming cost and S&D expenses • PAT came in at | 68.5 crore vs. expectation of | 51 crore primarily aided by superior margins and zero tax (we had built in 20% tax rate) Net adds disappoint, Phase III/IV additions to be seen in FY17E Dish TV ended FY15 with 12.9 million net subscribers, up from 11.4 million last year, adding 1.5 million subscribers, double the net adds (0.71 million) in FY14. During Q3FY16, subscriber addition (net) was tepid at 0.32 million vis-à-vis other DTH peers (Airtel DTH added 0.53 million while Videocon D2H added 0.43 million). The net subscriber base was at 14 million at the end of the quarter. As per the company, net subscriber additions were hit by stay order granted by courts in 10 states for phase III digitisation and management transition (CEO and COO had left in Q3FY16). The company remains upbeat on subscriber additions over the next two or three years on the back of Phase III/IV of digitisation and launch of its new product offering. We believe that Phase III additions would gain traction in FY17E. We have built in net subscriber addition of 1.5 million, 1.8 million and 1.6 million in FY16E, FY17E and FY18E, respectively, with subscriber base reaching 17.7 million in FY18E. ARPU growth yet to see traction… The fact that the company has been lagging behind its peers in terms of ARPU increase remains a concern. As per the management, reported ARPU at | 172 in Q3FY16 was lower partly due to lower activation income on account of lower subscriber addition and increased “Swatch Bharat Tax” of 0.5% from mid November onwards. We, however, believe the lower ARPU was also due to healthy Zing additions (lower ARPU offering), which form ~20-22% of incremental gross additions. We lower our ARPU growth estimates and build in an ARPU of | 173, | 178 and | 185 for FY16E, FY17E and FY18E, respectively. The company has also launched another low offering product at | 99/month (tariff of | 174 with minimum pack addition), which would drive subscription numbers in Phase III/IV areas. We believe that continued traction in Zing and the new pack could also keep ARPUs tepid in the near term. Lower subscriber addition, sub-par ARPU a concern; maintain HOLD Given Dish TV’s strict control on programming cost, its profitability is on an improving trajectory. However, we remain cautious owing to disappointment in subscriber addition with Dish losing its leadership market share, sub-par ARPU and uncertainty over the acceptance of the new license fee calculation by the government. We build in lower ARPU growth and await traction in subscriber addition, going ahead, to validate if Q3FY16 blip was just an aberration. We maintain our HOLD rating on the stock with a target price of | 87, using DCF methodology.

Variance analysis Q3FY16 Q3FY16E 771.5 783.3

Revenue

Other Income Employee Expenses License Fees Selling and Distribution expenses Administrative Expenses Programing Cost Other Operating Cost

Q3FY15 713.9

Q2FY16 752.4

YoY (%) QoQ (%) 8.1 2.5

4.2 28.9 0.0 67.9 39.8 207.3 159.7

15.0 31.3 59.1 72.8 40.1 217.7 101.8

15.4 25.8 74.4 44.0 30.8 198.9 78.2

19.7 29.6 0.0 68.1 37.9 203.5 155.1

-72.7 11.7 NA 54.4 29.1 4.2 104.1

-78.7 -2.5 NA -0.3 4.9 1.9 2.9

0.0

0.0

69.1

0.0

NA

NA

Others EBITDA EBITDA Margin (%)

2.5 265.5 34.4

2.0 258.6 33.0

1.5 191.2 26.8

3.2 64.9 -19.9 255.0 38.8 4.1 33.9 763 bps 52 bps

Depreciation Interest

146.3 54.9

158.0 51.9

161.6 47.9

133.0 54.8

-9.5 14.6

10.0 0.2

Total Tax PAT

0.0 68.5

12.7 51.0

0.0 -2.9

0.0 86.9

NA NA

NA -21.2

Key Metrics Net Subscriber Additions (Mn)

0.32

0.50

0.42

0.34

-23.8

-6.2

14.00 172.0

14.20 173.3

12.50 177.0

13.70 171.0

12.0 -2.8

2.2 0.6

Commission

Net Subscribers (Mn) ARPU (in |)

Comments Revenues were slightly lower than our expectation as ARPU during the quarter came in at | 172 vs. | 171 in Q2FY16 (our expectation - | 173.3), resulting in a tad lower subscription revenues at | 711.1 crore

The cost item has now been clubbed with other operating cost

The company continued to contain its programming expenses The cost line now includes license fees owing to accounting changes undertaken by the company The company now reports subscription net of the commision to save license fees. Hence, any amount on the cost line is missing in the quarter

Lower-than-expected content costs and S&D expenses led to higher-thanexpected margins

PAT came in higher primarily aided by superior margins and zero tax (we had built in 20% tax rate) During Q3FY16, subscriber addition (net) was tepid at 0.32 million vis-à-vis other DTH peers (Airtel DTH added 0.53 million while Videocon D2H added 0.43 million) Lower ARPU was owing to lower activation, impact of Swatch Bharat tax and higher contribution of Zing (low offering ARPU)

Source: Company, ICICIdirect.com Research

Change in estimates (| Crore) Revenue

Old 3,084.9

FY16E New % Change 3,054.8 -1.0

Old 3,540.4

EBITDA EBITDA Margin (%) PAT EPS (|)

1,025.3 33.2 236.8 2.2

1,028.0 33.7 258.3 2.4

1,211.8 34.2 333.3 3.1

0.3 42 bps 9.1 9.1

FY18E FY17E New % Change Comments 3,454.6 -2.4 3,932.8 Slightly lowered our revenues estimate as we build in lower ARPU and subscriber growth 1,182.3 34.2 344.6 3.2

-2.4 1,346.8 0 bps 34.2 Margins have been revised post incorporating 9MFY16 performance 3.4 409.3 3.4 3.8 Higher margins have led to upward revision in PAT

Source: Company, ICICIdirect.com Research

Assumptions zzzzzzzzzzzzzzzzzzzzzzzz

Net Subscriber Additions (Mn) Net Subscribers (Mn) ARPU (in |)

FY14 0.7 11.4 170

FY15 1.5 12.9 175

FY16E 1.5 14.4 173

Current FY17E 1.7 16.1 178

FY18E 1.6 17.7 185

Monthly Churn Rate

0.6%

0.6%

0.7%

0.6%

0.6%

Comments Earlier FY16E FY17E 1.7 1.6 Subscriber addition of Phase III in FY16E will spill over to FY17E 14.6 16.2 173 182 The ARPU numbers have been revised downward keeping in mind its new product, which is a low ARPU offering 0.7% 0.6%

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 2

Company Analysis Phase III/IV additions to be seen in FY17E Dish TV ended FY15 with 12.9 million net subscribers, up from 11.4 million last year, adding 1.5 million subscribers, double the net adds (0.71 million) in FY14. During Q3FY16, subscriber addition (net) was tepid at 0.32 million vis-àvis other DTH peers (Airtel DTH added 0.53 million while Videocon D2H added 0.43 million). The net subscriber base was at 14 million at the end of the quarter. As per the company, net subscriber additions were hit by a stay order granted by courts in 10 states as well as management transition (CEO and COO had left in Q3FY16). The company remains upbeat on subscriber additions over the next two or three years on the back of Phase III/IV of digitisation and launch of its new product offering. We believe that Phase III additions would gain traction in FY17E. We have built in net subscriber addition of 1.5 million, 1.8 million and 1.6 million in FY16E, FY17E and FY18E, respectively, with the subscriber base reaching 17.7 million in FY18E. Exhibit 1: Subscriber details trends 20.0

190

18.0

185

16.0

180

178

14.0

175

175

173

170

12.0

185

170

10.0

165

8.0

160

158

6.0

155

4.0

150

2.0 0.0

10.7

11.4

12.9

14.4

16.1

17.7

FY13

FY14

FY15E

FY16E

FY17E

FY18E

Net Subscribers (million) - LHS

145 140

ARPU (|)

FY13 ARPU not comparable due to change in accounting policy Source: Company, ICICIdirect.com Research

ARPU growth yet to see traction… The fact that the company has been lagging behind its peers in terms of ARPU increase remains a concern. As per the management, reported ARPU at | 172 in Q3FY16 was lower partly due to lower activation income due to lower subscriber addition and increased “Swatch Bharat Tax” of 0.5% from mid-November onwards. However, we believe that lower ARPU was also due to healthy Zing additions (lower ARPU offering), which form ~ 20-22% of incremental gross additions. We lower our ARPU growth estimates and build in an ARPU of | 173, | 178 and | 185 for FY16E, FY17E and FY18E, respectively. The company has also launched another low offering product at | 99/month (tariff of | 174 with minimum pack addition), which would drive subscription numbers in Phase III/IV areas. We believe that continued traction in Zing and the new pack could also keep ARPUs tepid in the near term.

ICICI Securities Ltd | Retail Equity Research

Page 3

Restructuring, accounting changes to lead to lower license fee outgo Dish TV had effected two accounting/restructuring changes in H1FY16, which boosted its margins. It transferred non-core activities and associated revenues to Dish Infra, its fully owned subsidiary leading to saving of license fees (10% of revenues) on non-core revenues. It also began reporting subscription revenues net of trade channel commissions (about 4% on recharge packs), which would drive further savings on license fees to the tune of ~| 12-15 crore on an annual basis. Such an accounting change continues to reflect in the fundamentals. We factor in the same in our estimates and, consequently, build in higher EBITDA margin of 33.7% in FY16E and 34.2% in FY17E and FY18E. Going ahead, net profit margins would also be aided as the company reduced its debt position by | 300 crore, which will lead to interest cost savings for the company. We expect net profit margins of 10.4% in FY18E. The change in the accounting policy is currently sub judice. A judgement against the company could be a downside risk to our EBITDA, PAT margin estimates. Exhibit 2: EBITDA trend 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 (5.0) (10.0)

26.7

25.0

(1.6) FY13

FY14

33.7

34.2

34.2

8.5

10.0

10.4

26.4

0.1 FY15E

FY16E

FY17E

FY18E

(5.8) EBITDA Margins %

NPM %

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 4

Valuation Given Dish TV’s strict control on programming cost, its profitability is on an improving trajectory. However, we remain cautious owing to disappointment in the subscriber addition with Dish losing its leadership market share, sub par ARPU and uncertainty over the acceptance of the new license fee calculation by the government. We build in lower ARPU growth and await traction in subscriber addition, going ahead, to validate if the Q3FY16 blip was just an aberration. We maintain our HOLD rating on the stock with a target price of | 87, using DCF methodology. Exhibit 3: DCF assumptions Particulars

Amount

WACC Revenue CAGR over FY16E - FY22E PV of Cash Flow Till Terminal Year

12.9% 13.3% 3,387.6

Terminal Growth Present Value of terminal cash flow PV of firm

3.0% 6,651.9 10,039.4

Less: Net Debt Total present value of the Equity (excluding current cash)

735.3 9,304.2

Number of Equity Shares outstanding DCF - Target price (|)

106.6 87.3

Source: Company, ICICIdirect.com Research

Exhibit 4: Valuations

FY15 FY16E FY17E FY18E

Sales (| cr) 2,773.2 3,054.8 3,454.6 3,932.8

Growth (%) 28.0 10.2 13.1 13.8

EPS (|) 0.0 2.4 3.2 3.8

Growth (%) NA 8,125.7 33.4 18.8

PE (x) NA NA 25.0 21.1

EV/EBITDA (x) 13.2 9.2 7.8 6.4

RoNW (%) NM NM 119.0 58.6

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 5

RoCE (% ) 15.4 41.0 42.7 40.3

Company snapshot 140 120 100

Target Price | 87

80 60 40 20

Jan-17

Oct-16

Jul-16

Apr-16

Jan-16

Oct-15

Jul-15

Apr-15

Jan-15

Oct-14

Jul-14

Apr-14

Jan-14

Oct-13

Jul-13

Apr-13

Jan-13

Oct-12

Jul-12

Apr-12

Jan-12

Oct-11

Jul-11

Apr-11

Jan-11

0

Source: Bloomberg, Company, ICICIdirect.com Research

Key events Date Mar-11

Event Registers a very high churn of 1.94 million subscribers and records a churn rate of 2.3%

Jun-12

Sunset date for Phase I of digitisation. Dish TV able to add only 1.1 million net susbcribers

Mar-13

Sunset date for Phase II of digitisation. Dish TV able to add only 1.1 million net susbcribers

Jan-14

Dish TV starts offering all the Indiacast UTV (except ETV) channels on an a la carte basis

Mar-14

Dish TV issues disconnection notice to 10 channels distributed by IndiaCast UTV, including CNBC-TV18 and IBN7 and some ETV regional channels, claiming low popularity In a bid to provide customised local television channels to regional viewers of the state, Dish TV India rolls out a new brand Zing. The new brand will offer regional channels as the base while other segments can be added as per the needs of customers

Mar-14 Jul-14

Trai recommends license period extension to 20 years from 10 years, renewable for 10 years at once and license fees calulation as 8% of adjusted gross revenues vs. 10% of gross revenues paid currently Launches Zing in Tamil Nadu

Jan-15 Source: Company, ICICIdirect.com Research

Top 10 Shareholders No. 1 2 3 4 5 6 7 8 9 10

Shareholding Pattern

Name Latest Filing Date % O/S Direct Media Distribution Ventures Pvt. Ltd. 30-Sep-15 42.90 Direct Media Solutions Pvt. Ltd. 30-Sep-15 16.89 Essel Group 30-Sep-15 3.30 Columbia Threadneedle Investments (US) 31-Dec-15 1.61 Baron Capital Management, Inc. 30-Sep-15 1.32 Reliance Capital Asset Management Ltd. 31-Dec-15 1.22 Hasham Investment & Trading Company P vt. Ltd. 30-Sep-15 1.00 Dimensional Fund Advisors, L.P. 31-Oct-15 0.71 Religare Invesco Asset Management Company Private Lim 30-Nov-15 0.63 Artisan Partners Limited Partnership 31-Dec-15 0.63

P ositionsition Change 457.2 457.2 180.0 180.0 35.2 -637.2 17.1 0.3 14.1 -5.1 13.0 0.0 10.7 0.0 7.5 0.0 6.8 0.0 6.7 5.2

(in % ) Promoter FII DII Others

Dec-14 Mar-15 64.5 64.5 13.1 12.8 3.5 3.7 18.9 19.0

Jun-15 64.5 18.6 4.0 12.9

Sep-15 64.5 19.8 4.0 11.8

Dec-15 64.4 8.7 5.8 21.1

Source: Reuters, ICICIdirect.com Research

Recent Activity Buys Name Direct Media Distribution Ventures Pvt. Ltd. Direct Media Solutions Pvt. Ltd. William Blair Investment Management, LLC Artisan Partners Limited Partnership Van Eck Associates Corporation Source: Reuters, ICICIdirect.com Research

Value Shares +742.28M +457.21M +292.23M +180.00M +9.49M +5.84M +7.92M +5.16M +5.66M +3.48M

ICICI Securities Ltd | Retail Equity Research

Sells Name Essel Group William Blair & Company, L.L.C. Baron Capital Management, Inc. Driehaus Capital Management, LLC Fuh Hwa Securities Investment Trust Co., Ltd.

Value -1,034.51M -9.09M -8.25M -3.51M -2.56M

Shares -637.21M -5.60M -5.08M -2.16M -1.53M

Page 6

Financial summary Profit and loss statement (Year-end March) Total operating Income Growth (% ) Employee Expenses Administrative Expenses Programing Cost License Fees Commission Other Expenses Total Operating Expenditure

| Crore

Cash flow statement

FY15 2781.6 10.9 101.8 118.0 800.8 288.8 248.9 490.3 2048.5

FY16E 3062.5 10.1 125.2 153.6 840.9 228.0 686.8 2034.4

FY17E 3456.2 12.9 143.9 169.3 946.6 260.8 753.3 2273.9

FY18E 3934.4 13.8 163.9 192.7 1077.6 296.9 856.5 2587.6

Others CF from operating activities (Inc)/dec in Investments (Inc)/dec in Fixed Assets

EBITDA

733.1

1028.0

1182.3

1346.8

Others

Growth (% ) Depreciation Interest Other Income PBT Exceptional Items Prior Period Items Total Tax PAT Growth (% ) EPS (|)

NM 613.8 175.4 63.5 7.4 0.0 0.0 4.2 3.1 NM 0.0

40.2 617.1 201.5 62.2 271.6 0.0 0.0 12.2 259.4 NM 2.4

15.0 666.7 152.4 60.0 423.1 0.0 0.0 78.5 344.6 32.8 3.2

13.9 759.0 136.1 60.0 511.6 0.0 0.0 102.3 409.3 18.8 3.8

(Year-end March) Profit af ter Tax Add: Depreciation Add: Interest Paid (Inc)/dec in Current Assets Inc/(dec) in CL and P rovisions

CF from investing activities Issue/(Buy back) of Equity Inc/(dec) in loan funds Dividend paid & dividend tax Interest Paid Others CF from financing activities Net Cash flow Opening Cash Closing Cash

| Crore FY15 3.1 613.8 201.5 -136.9 396.0

FY16E 258.3 617.1 152.4 13.3 41.7

FY17E 344.6 666.7 136.1 -27.4 71.3

FY18E 409.3 759.0 0.0 -45.6 118.7

(26.1) 1,051.5 0.0 -785.2

49.1 1,131.9 -150.0 -753.1

16.3 1,207.7 0.0 -762.4

136.1 1,377.5 0.0 -712.4

-75.4

27.4

0.0

0.0

-860.6 0.1 74.4 0.0 201.5 -380.9 -105.0 86.0 342.6 428.6

-875.7 0.0 -320.0 0.0 152.4 -354.0 -521.5 -265.3 428.6 163.3

-762.4 0.0 -150.0 0.0 136.1 -288.6 -302.4 142.9 163.3 306.2

-712.4 0.0 -150.0 0.0 0.0 -136.1 -286.1 379.0 306.2 685.2

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

Balance sheet

| Crore

(Year-end March) Liabilities Equity Capital Reserve and Surplus Total Shareholders funds Total Debt

FY15

FY16E

FY17E

FY18E

106.6 -419.9 -313.4 1,483.9

106.6 -161.6 -55.0 1,163.9

106.6 183.0 289.6 1,013.9

106.6 592.3 698.9 863.9

Other Non Current Liabilities Total Liabilities

18.3 1,188.8

45.7 1,154.5

45.7 1,349.1

45.7 1,608.4

Assets Gross Block

4,816.0

5,569.1

6,331.5

7,043.9

Less: Acc Depreciation Net Block Capital WIP Total Fixed Assets Net Intangible Assets Investments Inventory Debtors Loans and Advances Other Current Assets Cash Total Current Assets Creditors Provisions Total Current Liabilities Net Current Assets Other Non Current Assets Profit & Loss (Negative) Application of Funds

3,362.1 1,453.9 497.2 1,951.0 200.0 9.9 63.7 474.8 21.6 428.6 998.5 903.8 1,073.7 1,977.5 -979.0 16.7 0.0 1,188.8

3,979.2 1,589.9 497.2 2,087.0 350.0 10.9 75.3 458.2 12.2 163.3 720.0 985.2 1,033.9 2,019.2 -1,299.2 16.7 0.0 1,154.5

4,645.9 1,685.5 497.2 2,182.7 350.0 10.8 75.7 483.6 13.8 306.2 890.2 1,005.6 1,084.8 2,090.5 -1,200.3 16.7 0.0 1,349.1

5,405.0 1,638.9 497.2 2,136.1 350.0 12.3 90.3 511.3 15.7 685.2 1,314.8 1,020.7 1,188.4 2,209.1 -894.4 16.7 0.0 1,608.4

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Key ratios (Year-end March) Per share data (|) EPS Cash EPS BV DP S Cash Per Share Operating Ratios (%) EBITDA Margin PBT / Total Operating income

FY15

FY16E

FY17E

FY18E

0.0 5.8 -2.9 0.0 4.0

2.4 8.2 -0.5 0.0 1.5

3.2 9.5 2.7 0.0 2.9

3.8 11.0 6.6 0.0 6.4

26.4 4.3

33.7 13.5

34.2 14.9

34.2 14.9

PAT Margin Inventory days Debtor days Creditor days Return Ratios (%) RoE RoCE RoIC Valuation Ratios (x) P/E EV / EBITDA EV / Net Sales Market Cap / Sales Price to Book Value Solvency Ratios Debt/EBITDA Debt / Equity Current Ratio Quick Ratio

0.1 1.3 8.4 16.7

8.5 1.3 9.0 15.5

10.0 1.1 8.0 15.0

10.4 1.1 8.4 14.4

NM 15.4 48.4

NM 41.0 125.6

119.0 42.7 136.0

58.6 40.3 226.6

NM 13.2 3.5 0.0 0.0

NM 9.2 3.1 0.0 0.0

25.0 7.8 2.7 0.0 0.0

21.1 6.4 2.2 0.0 0.0

2.0 -4.7 0.3 0.3

1.1 -21.1 0.3 0.3

0.9 3.5 0.3 0.3

0.6 1.2 0.3 0.3

Source: Company, ICICIdirect.com Research

.

Page 7

ICICIdirect.com coverage universe (Media) CMP (|) TP(|) Rating Sector / Company 320 315 Hold DB Corp (DBCORP) 81 87 Hold DISH TV (DISHTV) 717 734 Hold ENIL (ENTNET) 197 311 Buy Eros (EROINT) 37 36 Sell Hathway Cables (HATCAB) 77 86 Hold HT Media (HTMED) 214 274 Buy Inox Leisure (INOX) 153 193 Buy Jagran Prakashan (JAGPRA) 760 935 Buy PVR (PVRLIM) 346 384 Hold Sun TV (SUNTV) 288 310 Buy TV Today (TVTNET) 410 430 Hold ZEE Ent. (ZEETEL) Source: Company, ICICIdirect.com Research

M Cap (| Cr) 5,882 8,622 3,416 1,818 3,085 1,804 1,968 5,010 3,539 13,635 1,716 39,398

ICICI Securities Ltd | Retail Equity Research

EPS (|) P/E (x) EV/EBITDA (x) FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E 17.2 16.4 18.1 18.6 19.6 17.7 10.3 10.5 9.6 0.0 2.4 3.2 NA 33.4 25.0 13.2 9.2 7.8 22.2 22.1 22.3 32.2 32.4 32.2 20.6 22.3 17.1 26.7 27.5 31.1 7.4 7.2 6.3 5.9 6.2 5.3 -2.2 -2.1 -1.1 NM NM NM 16.8 12.8 10.1 7.7 6.7 7.3 9.9 11.4 10.5 6.5 6.7 5.3 2.2 5.9 9.6 98.2 36.5 22.3 17.6 11.7 8.5 9.7 13.0 11.6 15.8 11.7 13.2 11.2 8.8 7.3 3.1 23.8 19.9 247.4 31.9 38.2 20.8 12.8 11.3 19.8 22.7 27.0 17.4 15.2 12.8 7.5 6.8 5.7 13.6 16.3 20.5 21.2 17.7 14.1 8.5 6.8 5.0 10.2 10.6 13.2 40.3 38.5 31.0 30.2 25.8 20.8

RoCE (%) RoE (%) FY15 FY16E FY17E FY15 FY16E FY17E 33.2 28.9 27.8 24.6 20.6 20.1 15.4 41.0 42.7 119.01 21.4 14.2 16.5 15.7 13.5 12.1 16.7 16.0 16.4 16.7 14.9 14.4 NM 0.4 3.2 NM NM NM 13.5 10.7 12.3 10.0 7.7 7.8 6.0 11.0 14.6 3.1 7.4 10.8 21.1 25.0 27.51 21.9 23.6 22.7 8.3 13.0 13.5 3.6 14.4 10.5 33.0 35.7 38.2 22.7 24.5 26.4 27.5 27.3 28.9 18.0 18.2 19.3 25.3 24.8 25.8 17.6 16.5 17.2

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RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more;

Pankaj Pandey

Head – Research

[email protected]

ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai – 400 093 [email protected]

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ANALYST CERTIFICATION We /I, Bhupendra Tiwary MBA, Sneha Agarwal, MBA Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.

Terms & conditions and other disclosures: ICICI Securities Limited is a Sebi registered Research Analyst having registration no. INH000000990. ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India’s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com. ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securitiesis is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances. This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction. ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months. ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts have any material conflict of interest at the time of publication of this report. It is confirmed that Bhupendra Tiwary MBA, Sneha Agarwal, MBA, Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ICICI Securities or its subsidiaries collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. It is confirmed that Bhupendra Tiwary MBA, MBA Sneha Agarwal, MBA, Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report. We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

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