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Dish TV has been moving higher since the company announced a 10 per cent price hike on monthly subscription pack. The stock has gained over 6 per cent in past five sessions and according to brokerages, it is likely to see further upmove.
Jawahar Goel, MD, Dish TV, in an interview to ET Now, said that the company had hiked prices by 10 per cent to pass on service tax component to customers. The price hike in subscription pack is uniform. Goel expects the ARPUs to touch Rs 180 in the next fiscal.
The company had earlier increased the set-top box (STB) prices in February twice. The price of subscription pack, unlike last year, will be hiked in South India also, which is a price sensitive market.
"While we've noted in the past that price increases don't entirely flow to the reported ARPUs (consumer downtrading & late payments) - but that said, such high price increases give us more comfort on our ARPU assumptions. We could see upside to our current ~5 per cent /3 per cent ARPU growth forecasts for FY14/15E," said a Citigroup report.
Higher ARPUs have very high sensitivity to profit growth, i.e.,~1 per cent increase in ARPUs translates into ~4 per cent increase in EBITDA, the brokerage said.
"We believe the industry will focus on profitability/cash generation given the balance sheet pressures - and the first signs are already visible. Dish TV should benefit from its renewed focus on steady and profitable growth," the brokerage said.
It had upgraded the stock to 'Buy' from 'Sell' in February with a target price of Rs 77, an upside of over 18 per cent to the current market price.
Brokerages have been bullish on Dish TV as the company is likely to benefit from the digitization. It is the leader in DTH industry with estimated gross subscribers' market share of around 28 per cent.
Macquarie has a 'outperform' rating on Dish TV and a target price of Rs 100.
"We think Street expectations have moderated in the last three months. Low expectations coupled with digitisation reforms and operating leverage from fixed content deals make the stock attractive, in our view," the Macquarie report said.
It expects the company's cash flow to triple by FY15.
"For nine months ending December 2012, Dish had generated free cash flow of Rs 600 million. This was driven by a combination of raising base pack prices and reducing the set top box (STB) subsidy. We recall that Dish has further raised STB prices by Rs 400 in the past month. We expect the company to generate FCF of over Rs 2.9 billion by FY15E," it added.
UBS in its recent report on Indian midcap companies has picked Dish TV as one of the investment ideas.
It is of the view that superior product offering should help the company in market share gains.
"ARPUs are likely to pick up from current levels driven by package price increases, pick up in HD subscriber base and improvement in collection efficiency," the report said. The brokerage has a target price of Rs 100 on the stock.
The stock closed at Rs 65.25, up 1.08 per cent, on the BSE. It touched a high of Rs 65.95 and a low of Rs 63.70 in trade today.
Brokerages bullish as Dish TV hikes subscription price - The Economic Times
Jawahar Goel, MD, Dish TV, in an interview to ET Now, said that the company had hiked prices by 10 per cent to pass on service tax component to customers. The price hike in subscription pack is uniform. Goel expects the ARPUs to touch Rs 180 in the next fiscal.
The company had earlier increased the set-top box (STB) prices in February twice. The price of subscription pack, unlike last year, will be hiked in South India also, which is a price sensitive market.
"While we've noted in the past that price increases don't entirely flow to the reported ARPUs (consumer downtrading & late payments) - but that said, such high price increases give us more comfort on our ARPU assumptions. We could see upside to our current ~5 per cent /3 per cent ARPU growth forecasts for FY14/15E," said a Citigroup report.
Higher ARPUs have very high sensitivity to profit growth, i.e.,~1 per cent increase in ARPUs translates into ~4 per cent increase in EBITDA, the brokerage said.
"We believe the industry will focus on profitability/cash generation given the balance sheet pressures - and the first signs are already visible. Dish TV should benefit from its renewed focus on steady and profitable growth," the brokerage said.
It had upgraded the stock to 'Buy' from 'Sell' in February with a target price of Rs 77, an upside of over 18 per cent to the current market price.
Brokerages have been bullish on Dish TV as the company is likely to benefit from the digitization. It is the leader in DTH industry with estimated gross subscribers' market share of around 28 per cent.
Macquarie has a 'outperform' rating on Dish TV and a target price of Rs 100.
"We think Street expectations have moderated in the last three months. Low expectations coupled with digitisation reforms and operating leverage from fixed content deals make the stock attractive, in our view," the Macquarie report said.
It expects the company's cash flow to triple by FY15.
"For nine months ending December 2012, Dish had generated free cash flow of Rs 600 million. This was driven by a combination of raising base pack prices and reducing the set top box (STB) subsidy. We recall that Dish has further raised STB prices by Rs 400 in the past month. We expect the company to generate FCF of over Rs 2.9 billion by FY15E," it added.
UBS in its recent report on Indian midcap companies has picked Dish TV as one of the investment ideas.
It is of the view that superior product offering should help the company in market share gains.
"ARPUs are likely to pick up from current levels driven by package price increases, pick up in HD subscriber base and improvement in collection efficiency," the report said. The brokerage has a target price of Rs 100 on the stock.
The stock closed at Rs 65.25, up 1.08 per cent, on the BSE. It touched a high of Rs 65.95 and a low of Rs 63.70 in trade today.
Brokerages bullish as Dish TV hikes subscription price - The Economic Times
