Dish TV - ICICI Direct

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Jan 31, 2017 ... Though net subscriber additions remained better than Airtel, which added. 0.18 mn subscribers, Dish TV's subscriber addition was lower than.
Result Update January 31, 2017

Dish TV (DISHTV)

Rating matrix Rating Target Target Period Potential Upside

: : : :

Hold | 90 12 months 2%

Performance stays weak with ARPU de-growth •

What’s changed? Target EPS FY17E EPS FY18E Rating

Unchanged Changed from | 2 to | 1.8 Changed from | 3.1 to | 2.8 Unchanged

Quarterly performance Revenue EBITDA EBITDA (%) PAT

Q3FY17 748.0 249.5 33.4 26.7

Q3FY16 YoY (%) 771.5 -3.0 265.5 (6.0) 34.4 -105 bps 68.5 NA

Q2FY17 QoQ (%) 779.3 -4.0 264.2 -5.6 33.9 -55 bps 70.1 -61.9

FY15 2,773 733 3 0.0

FY16 3,051 1,025 692 6.5

FY17E 3,063 1,049 190 1.8

FY18E 3,387 1,204 301 2.8

FY15 NM NM 14.2 NM NM NM

FY16 13.5 13.8 9.9 24.6 181.9 31.1

FY17E 49.4 50.4 9.7 16.5 33.4 29.0

FY18E 31.2 31.9 8.1 10.8 34.6 34.9

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

Stock data Particular Market Capitalization Total Debt (FY16) Cash (FY16) EV 52 week H/L Equity capital Face value

Amount (| crore) 9,379.9 1,156.4 339.2 10,115.1 109/ 65 106.6 1.0

Price performance Dish TV Hathway Cable





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

1M 4.2 12.1

3M -12.8 21.9

| 88

6M -12.1 18.5

12M 0.3 4.0

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

ICICI Securities Ltd | Retail Equity Research

Dish TV reported its Q3FY17 numbers with revenues at | 748.0 crore, down 3.0% YoY, lower than our expectation of | 786.1 crore. ARPU came in at | 152 vs. | 162 in Q2FY17 (lower than our expectation | 160), resulting in subscription revenues at | 692.1 crore lower than expectations of | 732.2 crore. Subscriber addition was lower at 0.20 million (mn) (I-direct estimate: 0.24 mn) as there were few additions in the post demonetisation period and recharges were deferred. The net subscriber base was at 15.3 mn at the end of the quarter EBITDA came in at | 249.5 crore vs. our expectation of | 263.2 crore, down 6.0% YoY. Margins came in at 33.4% as content costs came in lower with content deals being based on cost per subscriber (CPS) basis and subscriber additions coming in lower in the quarter PAT came in lower at | 26.7 crore, lower than our expectation of | 41.2 crore owing to misses on the operating front

Subdued subscriber addition as well ARPU decline in quarter The company reported a weak set of numbers on both subscriber addition as well as ARPU growth metric. Dish TV’s subscriber addition, in Q3FY17, was lower-than-expected at 0.20 mn (our estimate 0.24 mn), ending the quarter at 15.3 mn subscribers. The management highlighted net subscriber addition was hit by as much as 8.0% during the quarter and the churn increased to 0.9% from 0.8% in the previous quarter. The churn would have been higher but for the company’s call of providing seven days credit to subscribers (until December). The subscriber addition numbers have been slightly reduced to 1.08 & 1.28 mn in FY17E & FY18E, respectively. Demonetisation hurts Dish TV’s ARPU We highlight that Dish, in the last couple of quarters, has displayed a weaker ARPU trajectory vis-à-vis its peers who seem to have displayed a better ability to take price hikes. ARPU in the quarter was at | 152 (down 6.3% QoQ) vs. | 162 in Q2FY17 as customers resorted to down-trading of packs and deferral of recharges owing to demonetisation. The ARPU decline for Dish was more profound vs. Airtel D2H, which reported a flattish QoQ ARPU. Though there was increasing demand in the HD subscriber base, forming 20.0% of incremental subscriber additions & was at 13.0% of the overall base aiding ARPUs, 65.0% of its subscribers have base packs (including low value packs like Zing/99 packs), restricting the ARPU increase. With the reducing downtrading of subscribers and HD additions, ARPU is expected to increase 2.6% to | 163 by FY18E. Await ARPU growth trajectory; maintain HOLD We highlight that Dish, in recent years, seems to have let go its grip on the leadership position by slipping both in terms of ARPU growth and market share in net addition and has been underperforming peers in terms of revenue and EBITDA. Though there are margin accretive triggers in the near term in the form of 1.0-1.5% savings with higher share of digital recharges vs. dealer recharges, GST in the offing, savings in the license fees, the company should deliver on the key metric of ARPU growth and subscriber additions. We continue to maintain our HOLD recommendation with a target price of | 90. There would be additional cost synergies and revenue benefits once the Videocon merger is complete, which is expected by Q3FY18.

Variance analysis Q3FY17 Q3FY17E 748.0 786.1

Revenue

Q3FY16 771.5

Q2FY17 779.3

YoY (%) QoQ (%) -3.0 -4.0

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

18.1 36.1 55.1 118.1 220.1

13.0 36.9 55.1 126.5 235.7

4.2 28.9 0.0 107.7 207.3

11.1 36.4 54.0 112.5 238.9

330.7 25.2 NA 9.7 6

62.8 -0.8 NA 5.0 -8

Other Operating Cost Others EBITDA EBITDA Margin (%) Depreciation Interest

66.8 2.3 249.5 33.4 165.6 59.1

66.8 1.9 263.2 33.5 160.9 53.7

159.7 -37.2 265.5 34.4 146.3 54.9

70.1 -58.1 3.1 -106 264.2 -6.0 33.9 -105 bps 163.5 13.2 55.4 8

-4.7 -28 -5.6 -55 bps 1.3 7

Total Tax PAT

16.3 26.7

20.3 41.2

0.0 68.5

-13.6 70.1

NA NA

-219 -61.9

Key Metrics Net Subscriber Additions (Mn)

0.20

0.24

0.32

0.26

-35.6

-21.2

15.30 151.8

15.34 160.4

14.00 172.0

15.10 162.0

9.3 -11.8

1.4 -6.3

Net Subscribers (Mn) ARPU (in |)

Comments Revenues came in lower-than-expected owing to lower-than-expected subscriber additions at 0.20 million and huge decline in ARPU, which came in at | 152 vs. | 162 in Q2FY17

The content costs deals are mainly on the cost per subscriber basis. Lower subscriber additions in the quarter led to lower content costs. In addition, major sporting event in the quarter was absent leading to lower costs

PAT came in lower than estimates owing to misses on the operating performance The net subscriber addition came in lower-than-expected at 0.20 mn (our estimate 0.24 mn) The ARPU in the quarter was hit by deferral of recharges owing to demonetisation, downtrading of packs by subscribers and lower activation revenues in the quarter

Source: Company, ICICIdirect.com Research

Change in estimates (| Crore) Revenue

Old 3,148.6

FY17E New % Change 3,063.3 -2.7

Old 3,559.7

FY18E New % Change 3,386.9 -4.9

EBITDA EBITDA Margin (%)

1,073.6 34.1

1,049.3 34.3

-2.3 16 bps

1,263.6 35.5

1,204.5 35.6

-4.7 7 bps

208.0 2.0

190.0 1.8

-8.6 -8.6

335.1 3.1

300.7 2.8

-10.3 -10.3

PAT EPS (|)

Comments The cut in topline estimate is owing to lower ARPU estimates as per subdued growth seen in the last two quarters Margin estimates have been tweaked incorporating the management commentary of reduced content costs, going ahead

Source: Company, ICICIdirect.com Research

Assumptions z

Net Subscriber Additions (Mn)

FY15 1.5

FY16E 1.6

Current FY17E FY18E 1.1 1.3

Earlier FY17E FY18E 1.3 1.3

Net Subscribers (Mn) ARPU (in |)

12.9 175.4

14.5 172.0

15.6 158.8

16.9 162.9

15.8 162.2

17.1 169.1

0.7%

0.8%

0.7%

0.8%

0.6%

Monthly Churn Rate 0.6% Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Comments FY17 subscriber addition estimate has been impacted owing to low subscriber addition in the quarter We lower our ARPU estimates based on the ARPU performance in the last two quarters and the susbcriber profile being relatively lower compared to peers

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Company Analysis Subscriber additions remain subdued yet again Though net subscriber additions remained better than Airtel, which added 0.18 mn subscribers, Dish TV’s subscriber addition was lower than expected at 0.20 mn (our estimate 0.24 mn), ending the quarter at 15.3 mn subscribers. The subscriber addition remained lower than Videocon, which added 0.24 million subscribers. However, we also note that Dish has gradually slipped in terms of markets share in net additions from being a leader with~30%+ in FY12 to ~25% currently, which is clearly a sign of worry. The management highlighted net subscriber addition was hit by as much as 8.0% during the quarter. The churn increased to 0.9% from 0.8% in the previous quarter. The churn would have been higher but for the company’s call of providing seven days credit to subscribers (until December). The subscriber addition numbers have been slightly reduced to 1.08 & 1.28 mn in FY17E & FY18E, respectively. Exhibit 1: Subscriber details trends 18.0

180

16.0

175

14.0

175 172

170

12.0

170

10.0

163

8.0 6.0

160

159

158

155

4.0 2.0 0.0

165

150 10.7

11.4

12.9

14.5

15.6

16.9

FY13

FY14

FY15E

FY16E

FY17E

FY18E

Net Subscribers (million) - LHS

145

ARPU (|)

FY17E & FY18E ARPU are not comparable owing to change in accounting policy Source: Company, ICICIdirect.com Research

ARPU disappoints again… We highlight that Dish, over the last couple of quarters, has displayed weaker ARPU trajectory vis-à-vis its peers who seem to have portrayed a better ability to take price hikes. ARPU during the quarter came in at | 152 vs. | 162 in Q1FY17, owing to after effects of demonetisation with the company having ~65% exposure to subscribers beyond top cities. Moreover, customers deferred recharges owing to cash crunch while there was down trading of packs in the existing subscriber base. Also, lower-than-expected net subscriber addition also weighed down on ARPU. We also note that its peers like Airtel D2H reported flattish ARPU on a QoQ basis vs. a 6.3% QoQ decline in the ARPU for Dish TV. Though there has been increasing demand in the HD subscriber base, which forms 20.0% of incremental subscriber additions & is at 13.0% of the overall base aiding the ARPUs, 65.0% of its subscribers have base packs (inclusive of low value packs such as Zing/99 packs), restricting the ARPU increase. With the reducing downtrading of subscribers and HD additions, ARPU is expected to increase 2.6% to | 163 by FY18E.

ICICI Securities Ltd | Retail Equity Research

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Several margin triggers in the offing, revenue improvement key In addition, with demonetisation, the percentage of subscribers resorting to digital recharges have been increasing and is at 38.0% currently, which the management expects to inch up to 40.0% by FY17E. This will bring ~150-200 bps margin benefit expansion as costs for recharge from the traditional voucher channel are 3.6% against 1.5-2% from digital wallets or gateways. Moreover, the company also expects content costs to increase in the near term in the range of 6.0-7.0% (earlier guidance of 10-12.0%) owing to the CPS deals and ongoing negotiations with two major broadcasters, which is EBITDA accretive. The benefit from the Dish Videocon merger is only expected when the deal is completed around Q3FY18. Dish reports revenues net of entertainment tax vs. gross earlier. As a result of the accounting change, the company also expects savings in terms of the entertainment tax of ~| 17-18 crore, which would now be charged as a percentage on net revenues. Furthermore, the company also expects a potential cut in license fee to 8% from 10%, as per Trai suggestion to boosts margins. The company also expects to benefit from GST implementation. For the time being, we do not build in licence fee and GST benefits. We have built in EBITDA margins of 34.3% in FY17E and 35.6% in FY17E and FY18E, respectively. Exhibit 2: EBITDA trend 40.0 35.0 30.0

33.6 26.7

25.0 20.0 15.0 10.0

25.0

(1.6) FY13 (5.8)

FY14

35.6

22.7

6.2

5.0 (5.0) (10.0)

26.4

34.3

8.9

0.1 FY15E

EBITDA Margins %

FY16E

FY17E

FY18E

NPM %

Source: Company, ICICIdirect.com Research

Announces merger with Videocon D2H Dish TV and Videocon D2H (Vd2h) have entered into an agreement for amalgamation of Vd2h into Dish TV in consideration for new stock issuance by Dish TV to the shareholders of Vd2h. Consequent to the amalgamation, Vd2h, an India incorporated entity with ADS listed on Nasdaq, will merge into Dish TV. The combined entity will be renamed Dish TV Videocon Ltd. Dish TV Videocon will issue 85.78 crore (worth | 7500 crore as on November 11, closing price) fresh shares as consideration to shareholders of Vd2h wherein shareholders would get 2.02 shares in Dish TV Videocon for every share in Vd2h. The implied valuation is at ~35% premium to Vd2h’s market cap (as on November 10, closing price). However, on an EV/EBITDA basis, valuation is at Vd2h’s annualised FY17 EV/EBITDA of 8.5x vs. Dish FY17E EV/EBITDA of 9.4x. The combined subscriber base would be 27.6 million, as of Q2FY17, largest in the DTH space. The merged entity would have ~17% market share in C&S households in India. The merged entity’s

ICICI Securities Ltd | Retail Equity Research

Page 4

proforma FY16 turnover and EBITDA was at ~| 5916 crore & ~| 1814 crore, respectively, making it largest listed media company in India in terms of turnover and operating profit. The company expects the merger to be complete by Q3FY18. Other Highlights:

ICICI Securities Ltd | Retail Equity Research



Digitisation Update: Phase IV digitisation will be delayed for another three to four months. The company expects ~25.0% market share in the net adds in Phase III digitisation. The management, however, feels the industry addition will come down to 9.5 mn vs. the 11.3 mn in FY16



Capex for the quarter was at | 260 crore (| 730 crore for 9MFY17). Free cash flows came in at | 49.0 crore for the quarter



Gross debt was at | 1220 crore while net debt was | 605 crore. Dish intends to reduce the debt by another | 50 crore in FY17



Content cost: The content cost increase guidance was reduced from 10-12.0% to 6-7.0% in the current and coming year



The subscriber acquisition cost was at | 1725

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Valuation We highlight that Dish, in recent years, seems to have let go its grip on the leadership position by slipping both in terms of ARPU growth and market share in net addition and has been underperforming peers in terms of revenue and EBITDA. Though there are margin accretive triggers in the near term in the form of 1.0-1.5% savings with higher share of digital recharges vs. dealer recharges, GST in the offing, savings in the license fees, the company should deliver on the key metric of ARPU growth and subscriber additions. We continue to maintain our HOLD recommendation with a target price of | 90. There would be additional cost synergies and revenue benefits once the Videocon merger (which is expected by Q3FY18) is complete. Exhibit 3: DCF assumptions Particulars WACC Revenue CAGR over FY16E - FY22E PV of Cash Flow Till Terminal Year Terminal Growth Present Value of terminal cash flow PV of firm Less: Net Debt Total present value of the Equity (excluding current cash) Number of Equity Shares outstanding DCF - Target price (|)

Amount 12.6% 11.0% 3,573.4 3.0% 6,747.4 10,320.8 735.2 9,585.6 106.6 90

Source: Company, ICICIdirect.com Research

Exhibit 4: Valuations

FY15 FY16 FY17E FY18E

Sales (| cr) 2,773.2 3,050.7 3,063.3 3,386.9

Growth (%) 28.0 10.0 0.4 10.6

EPS (|) 0.0 6.5 1.8 2.8

Growth (%) NA NA (72.6) 58.2

PE (x) NA NA 49.4 31.2

EV/EBITDA (x) 14.2 9.9 9.7 8.1

RoNW (%) NM 181.9 33.4 34.6

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 6

RoCE (%) 15.4 31.1 29.0 34.9

92.0 90.0 88.0 86.0 84.0 82.0 80.0 78.0 76.0 74.0 72.0 70.0

140 120

(|)

100 80 60 40 20 0 Jan-15

Apr-15

Jun-15 Price

Aug-15

Nov-15

Idirect target

Jan-16

Apr-16

Jun-16

Consensus Target Mean

Sep-16

Nov-16

(%)

Recommendation History vs. Consensus Estimates

Jan-17

% Consensus with BUY

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 Jan-15

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

Source: Company, ICICIdirect.com Research

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

Shareholding Pattern

Name Essel Group HDFC Asset Management Co., Ltd. Agrani Holdings Mauritius, Ltd. Reliance Nippon Life Asset Management Limited Macquarie Funds Management Hong Kong Ltd. Artisan Partners Limited Partnership Manning & Napier Advisors, LLC Hasham Investment & Trading Co., Pvt. Ltd. Van Eck Associates Corporation Birla Sun Life Asset Management Company Ltd.

Latest Filing Date % O/S 30-Sep-16 59.78 31-Dec-16 3.93 30-Sep-16 3.30 31-Dec-16 1.48 31-Dec-16 1.15 30-Jun-16 1.13 31-Dec-16 1.11 30-Sep-16 1.00 30-Jun-16 0.90 31-Dec-16 0.86

Positionsition Change 637.2 0.0 41.9 1.2 35.2 0.0 15.8 0.2 12.3 2.3 12.0 0.6 11.9 -8.0 10.7 0.0 9.6 0.0 9.1 0.0

(in %) Promoter FII DII Others

Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 64.4 64.4 64.4 64.4 64.4 8.7 11.3 12.5 19.8 16.0 5.8 6.2 6.9 6.5 7.9 21.0 18.1 16.2 9.3 11.7

Source: Reuters, ICICIdirect.com Research

Recent Activity Buys Name Macquarie Funds Management Hong Kong Ltd. HDFC Asset Management Co., Ltd. Artisan Partners Limited Partnership The Vanguard Group, Inc. BlackRock Institutional Trust Company, N.A. Source: Reuters, ICICIdirect.com Research

Sells Value +2.82M +1.47M +0.83M +0.52M +0.29M

ICICI Securities Ltd | Retail Equity Research

Shares +2.27M +1.18M +0.58M +0.42M +0.23M

Name Baron Capital Management, Inc. Manning & Napier Advisors, LLC DNB Asset Management (Asia) Limited Tata Asset Management Limited Columbia Threadneedle Investments (US)

Value -14.78M -10.01M -5.28M -4.34M -3.09M

Shares -10.56M -8.03M -3.97M -3.00M -2.48M

Page 7

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

| Crore

Cash flow statement

| Crore

FY15 2781.6 10.9 101.8 118.0 800.8 288.8 248.9 490.3 2048.5

FY16 3059.9 10.0 122.9 0.0 855.5 217.5 839.2 2035.0

FY17E 3073.9 0.5 146.7 0.0 912.7 221.5 743.8 2024.7

FY18E 3388.5 10.2 155.8 0.0 978.8 243.9 805.6 2184.0

(Year-end March) Profit after Tax Add: Depreciation Add: Interest Paid (Inc)/dec in Current Assets Inc/(dec) in CL and Provisions Others CF from operating activities (Inc)/dec in Investments (Inc)/dec in Fixed Assets

FY15 3.1 613.8 208.7 -136.9 396.0 (33.3) 1,051.5 0.0 -785.2

FY16E 692.4 590.7 219.3 60.6 361.3 (10.6) 1,913.7 -32.0 -1,059.7

FY17E 190.0 643.3 158.6 5.2 9.6 60.7 1,067.5 -50.0 -900.0

FY18E 300.7 657.1 0.0 -23.8 181.0 158.6 1,273.6 -150.0 -750.0

733.1 NM 613.8 175.4 63.5 7.4 0.0 0.0 4.2 3.1 NM 0.0

1024.9 39.8 590.7 208.7 64.0 289.5 0.0 0.0 -402.9 692.4 NM 6.5

1049.3 2.4 643.3 219.3 54.1 240.7 0.0 0.0 50.7 190.0 -72.6 1.8

1204.5 14.8 657.1 158.6 60.0 448.8 0.0 0.0 148.1 300.7 58.2 2.8

Others 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

-75.4 -860.6 0.1 74.4 0.0 208.7 -388.1 -105.0 86.0 342.6 428.6

-376.8 -1,468.6 0.0 -327.5 0.0 219.3 -426.4 -534.6 -89.4 428.6 339.2

0.0 -950.0 0.0 -200.0 0.0 158.6 -379.6 -420.9 -303.5 339.2 35.7

0.0 -900.0 0.0 -150.0 0.0 0.0 -158.6 -308.6 64.9 35.7 100.6

FY15

FY16E

FY17E

FY18E

106.6 -419.9 -313.4 1,483.9 18.3 1,188.8

106.6 274.1 380.7 1,156.4 63.5 1,600.6

106.6 462.5 569.1 956.4 63.5 1,589.0

106.6 763.2 869.8 806.4 63.5 1,739.7

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

Balance sheet (Year-end March) Liabilities Equity Capital Reserve and Surplus Total Shareholders funds Total Debt Other Non Current Liabilities Total Liabilities

| Crore

Assets Gross Block 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

4,809.5 3,355.6 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

5,716.4 3,946.3 1,770.1 650.0 2,420.1 232.0 12.6 72.5 400.1 24.3 339.2 848.5 1,106.4 1,232.4 2,338.8 -1,490.3 438.7 0.0 1,600.6

6,616.4 4,589.6 2,026.8 650.0 2,676.8 282.0 12.6 65.5 401.7 24.4 35.7 539.9 1,111.0 1,237.5 2,348.5 -1,808.6 438.7 0.0 1,589.0

7,366.4 5,246.7 2,119.7 650.0 2,769.7 432.0 13.9 65.2 421.9 27.0 100.6 628.7 1,228.3 1,301.1 2,529.5 -1,900.8 438.7 0.0 1,739.7

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

FY15

FY16

FY17E

FY18E

0.0 5.8 -2.9 0.0 4.0

6.5 12.0 3.6 0.0 3.2

1.8 7.8 5.3 0.0 0.3

2.8 9.0 8.2 0.0 0.9

26.4 4.3

33.6 14.2

34.3 13.3

35.6 16.2

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

22.7 1.5 8.7 27.5

6.2 1.5 7.8 27.5

8.9 1.5 7.0 27.5

NM NM NM

181.9 31.1 479.1

33.4 29.0 122.1

34.6 34.9 204.1

NM 14.2 3.8 0.0 0.0

NM 9.9 3.3 0.0 0.0

49.4 9.7 3.3 0.0 0.0

31.2 8.1 2.9 0.0 0.0

2.0 -4.7 0.3 0.3

1.1 3.0 0.2 0.2

0.9 1.7 0.2 0.2

0.7 0.9 0.2 0.2

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

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ICICI Securities Ltd | Retail Equity Research

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ICICIdirect.com coverage universe (Media) EPS (|) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%) CMP M Cap Sector / Company (|) TP(|) Rating (| Cr) FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E 377 395 Buy 6,922 16.1 20.5 23.3 23.3 18.4 16.2 13.0 10.3 8.9 29.9 30.9 30.7 22.0 23.0 22.7 DB Corp (DBCORP) 88 90 Hold 9,380 6.5 1.8 2.8 13.5 49.4 31.2 9.9 9.7 8.1 31.1 29.0 34.9 181.9 33.4 34.6 DISH TV (DISHTV) 776 790 Hold 3,701 21.0 13.3 22.5 37.0 58.3 34.4 23.7 27.0 17.0 14.5 11.1 16.3 13.0 7.7 11.6 ENIL (ENTNET) 172 190 Buy 1,605 22.9 19.4 23.7 7.5 8.9 7.2 5.3 8.3 5.9 13.5 9.9 12.9 12.1 9.8 10.7 Eros (EROINT) 80 80 Hold 1,863 7.2 8.1 7.2 11.1 9.9 11.0 7.0 5.1 4.1 10.7 12.1 11.3 8.2 8.4 7.1 HT Media (HTMED) 219 255 Hold 2,012 8.4 3.7 8.1 26.0 58.7 27.0 11.6 15.0 10.5 11.1 6.9 11.3 10.9 4.4 8.6 Inox Leisure (INOX) 1,253 1,375 Buy 5,858 25.4 19.1 24.9 49.3 65.5 50.4 18.4 18.2 14.9 15.6 12.9 15.1 14.3 9.5 10.9 PVR (PVRLIM) 533 560 Buy 21,018 23.2 8.7 36.1 38.7 42.6 24.9 27.0 29.5 Sun TV (SUNTV) w 26.3 31.1 23.0 20.3 17.1 11.1 10.2 275 335 Buy 1,638 15.8 17.9 21.9 17.4 15.3 12.5 10.1 8.4 6.7 27.6 26.3 27.7 17.7 17.4 18.2 TV Today (TVTNET) 496 530 Buy 47,669 10.7 11.2 16.9 46.4 44.2 29.4 30.4 23.8 19.7 25.9 24.6 28.6 16.8 15.0 18.9 ZEE Ent. (ZEEENT) Source: Company, ICICIdirect.com Research

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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 (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 Limited is a Sebi registered Research Analyst with Sebi Registration Number – INH000000990. 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 Securities 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 associates 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 and their relatives 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 or their relatives 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, 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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