JitendraKumar
Contributor
- Joined
- 30 Sep 2012
- Messages
- 7,105
- Reaction score
- 4,072
Multi-layered tax implication denting profitability of DTH industry; GST seems the way out:The direct-to-home (DTH) services industry is currently reeling under multiple taxes (levied by both the central government and the state governments) The inconsistency in taxation (50% for the DTH operators against 32% for LCOs) is currently making the higher-end DTH technology costlier as compared with the LCO services for the end-user, leading to lower offtake of digital services. With phases 3 and 4 of digitisation on the anvil and around 6 crore subscribers expected to switch to digital cable TV, the simplification of the existing tax policy would be a boon for the DTH industry. The introduction of the GST will be a win-win situation for both the DTH service providers (who will reap the benefits of a rationalised tax regime) and the end-consumer as the service providers will be able to pass on some of the benefits to the consumers, making the DTH services that much more viable as compared with the LCOs.New offering, Zing, could boost subscription revenues in phases 3 and 4
ish TV has created a new sub-brand called Zing to target the regional markets and the package will allow its subscribers access to a variety of regional channels. Zing already contributes 14-15% of the total subscriber revenues. Going forward, as Zing achieves further scale and as phases 3 and 4 of the digitisation process get implemented, the momentum in the subscription revenue growth would remain intact in FY2015 (a 17.6% subscription revenue growth was seen in FY2014).Valuation:At the current level the stock is trading at 7.7x EV/EBITDA based on the FY2016 earnings estimate which is a steep discount to its three-year average of 13.6x.
After several years of underperformance, we believe Dish TV is well poised to deliver a strong performance and expect a 20% upside potential in the stock price in the next four to six months.
Sharekhan positive on Dish TV India - Moneycontrol.com
ish TV has created a new sub-brand called Zing to target the regional markets and the package will allow its subscribers access to a variety of regional channels. Zing already contributes 14-15% of the total subscriber revenues. Going forward, as Zing achieves further scale and as phases 3 and 4 of the digitisation process get implemented, the momentum in the subscription revenue growth would remain intact in FY2015 (a 17.6% subscription revenue growth was seen in FY2014).Valuation:At the current level the stock is trading at 7.7x EV/EBITDA based on the FY2016 earnings estimate which is a steep discount to its three-year average of 13.6x.After several years of underperformance, we believe Dish TV is well poised to deliver a strong performance and expect a 20% upside potential in the stock price in the next four to six months.
Sharekhan positive on Dish TV India - Moneycontrol.com
