EQUITY ANALAYST PERSPECTIVE | DISH TV

Nitin Pilla(092)|Sivasubramanian (106) |Ramkumar(219)

Sohom Karmakar(231)|Abhishwet Dhete(311)
Group 9 | IAPM | Section A

INTRODUCTION
About Dish
TV : -

Introduced in 2003, by Essel group, became a first direct to home (DTH) service in India
Market leader in DTH industry with 27% market share
Provides Services such as games, movies on demand, interactive TV other than normal 465
different channels
Three subsidiaries: -Integrated Subscriber Management Services (ISMSL), Agrani Satelite
Services (ASSL), Agrani Convergence (ACL)

Total channels provided by different companies

Market Share (2016)

500

Total number of channels

400

50

38
46

Dish Mini

35

300

12

200 415

336

389

100

12

378
270

Companies
HD channels Total channel

220

Dish
Welcome
Dish A la
Carte

Dish Maxi

Product And
Services
Dish
Freedom

Dish Maxi
Plus
Chlid Pack
Dish
Freedom
Plus

Airtel; 19%

Videocon; 16%

Reliance Digital; 6%
Dish TV; 27%

Sun Direct; 12%

Tata Sky; 20%

Timeline: 2003

First DTH in India

2004

First to negotiate content on fixed basis

2007

First to launch live TV for moving vehicle

2009

First to achieve operational breakeven in India

2016

First to launch high definition

2010
Expanded its channel capacity by 50%

2011

2012

Become asias first company to acquire 10 million

subscribers
Alliance with J&K bank enabling it to offer recharge
preference to its subscribers in the state
Added a number of Telugu, Kannada, & Oriya channels to
facilitate AP, Karnataka, & Orissa state

Share Holding Pattern

9.79%

First to have positive FCF in Indian DTH industry

Non institutions; 9.79

Institutions; 25.8

2013

First to launch airline TV for DTH viewers Dish online

2014

First to launch sub brand targeting regional language

markets- zing

2015

First to become PAT positive company in DTH industry

First to launch home video system- Dish Flix

25.8%

64.4%
Promoters ; 64.41

Business Model
Dish TV India Ltd.

100% prepaid customized and standardized

services

Profit & loss structure FY15

Consolidated Revenue
21%
%
3%
3%

Subscription revenues
Lease rent
Bandwidth income

Upfront subsidy on consumer premises

equipment (CPE)

Advertising income
91%

Other income

Average ARPU is Rs. 172

Churn rate is 0.7% per month
Implied average subscriber life of 10 years
Consolodated Expenses
Pro gra mming a nd
o the r cos t
S elling and
d is tribution
expe nse s
Lice ns e fee s
Trans po nde r le as e
Other o pera ting
co s ts

INDUSTRIAL
OVERVIEW

Indian Television Industry

Customer
Base
170 Mn households (2014) out of
270 Mn households (~61%
penetration)

Growth rate

Subscription
Revenues
In 2015, 65% of total revenue
Expected growth rate: - 16%

In 2010, Initiative taken by TRAI to

implement Dish cable TV at pan India level

Penetration
250
196

200

Entire project was supposed to be carried

out in 4 phases

168

161
150

Mn

100

82

80

90

Phase 1

50
0

For FY 2008-14,
Growth rate: - CAGR 12%,
from 241 Bn in 2008 to 472 Bn in
2014
For forecast period FY 2014-19
Expected growth rate: - 15.5%
Expected Market size: - 975 Bn (FY
2019)

Other Growth Factors

2013

2014

2019E

Year
TV
Household

C&S Subscriber

200
175
180
160
147
160
129
140
107 114
120
96
100
85
Mn 80
57
60
43
40 25
20
0

year

Implementation in 4
metros by Dec. 2011
Target :- 13 Mn
households

Phase 3
Planned to tap 7709
urban areas by dec
2015

Phase 2
Implementation in
26 cities with
population more
than 1 Mn
by Mar. 2013
Target :- 13 Mn
households

Phase 4
Establish
infrastructure for
Dish cable TV for
rest of the India by
Dec 2016

SWOT Analysis for DISH TV

PORTERs five forces

PEER Group Analysis

REFERENCES
1) http://www.dishtv.in/
2)http://indianresearchjournals.com/

FUNDAMENTAL ANALYSIS
Revenue
3,102
2,782
2,509

2,167

1,957

FY12

FY13

FY14

FY15

FY16

The topline has grown at a CAGR of

13% over the past 5 years
Company poised for higher growth
due to expected increase in
number of middle income
households

EBITDA and Margin

180
175

172

170
165
160
155

25.33%

26.74%
157

163

40.00%
174
35.00%
33.72%
30.00%

25.00%

26.36%

20.00%

19.72%

151

15.00%

150
145

10.00%

140

5.00%

135

FY12

FY13

FY14
EBITDA

FY15
EBITDA Margin

FY16

0.00%

EBITDA Margin is one of the best in

the industry
The trend shows that the company
has achieved operational leverage
Operating profit gets hurt due to
huge depreciation

FUNDAMENTAL ANALYSIS
Asset Turnover Ratio
0.91
0.74

0.88
0.79

0.69

FY12

FY13

FY14

FY15

The asset turnover ratio measure

the efficiency of the company
It has remained below 1, due to
high fixed assets
Expected to improve when the
subscriber increases in future

FY16

ARPU
172

174

163

157
151

FY12

FY13

FY14

FY15

FY16

Average Revenue Per User has

shown consistent increase
Expect ARPU to increase between
4% - 7% due to proposed increase
in monthly subscription rate

FLOAT AND MOAT

Float:

DishTVs business model involves collection of

subscription fees upfront which constitutes 90% of
their revenue

This is a revolving fund with no collateral, no interest

and no repayment which makes DishTV an ideal float
candidate

Moat:

Compared to its peers DishTV has competitive

advantage in the following areas:

Highest transponder capacity

Maximum content tie-ups

Maximum HD channels

Widest service network

Widest dealer-distributor network

With a superior number of Linear and HD channels at

their disposal they can reach a large customer base

They have steadily reduced the programming and

subscription costs as percentage of revenue as well as
their net investment per subscriber

Even with lesser investment per subscriber they have

been able to generate more sales which imply a moat
characteristic

Fixed assets have increased however subscriber base

has increased more in proportion which has led to
lesser investment per subscriber

Further, they have a 0% dividend payout ratio which

means they are investing capital towards process and
operating efficiency- which implies a scalable moat

OUTPERFORMED THE INDEX

Over the past two years Sensex has delivered -0.15%

returns, whereas Dish TV has delivered 73% returns and has
grossly outperformed the market

REASONS FOR OUTPERFORMANCE

Positive free
cash flow
Distribution
infrastructure
25000 outlets

Increasing
ARPU

Focus on
hardware sales
and ancillary
activities

Consistent
double digit
growth for 7
years
Differentiated
products
Movies on
demand

VALUATION
Below we outline the derivation of
our DCF valuation
Rs
EBIT
Tax
D&A
Wcap changes

Capex
FCFF
Disc Factor
PV of FCF

FY19 FY20 FY21 FY22 FY23

FY16E FY17E FY18E E
E
E
E
E
10,70 13,55 16,89 20,16 23,83
4,311
5,544
7,930
2
5
6
3
2
-1,189 2,140 3,389 4,224 5,041 -5,958
5,879

6,061

6,941

7,390

7,811

8,152

8,547

9,000

542

711

822

943

1,069

1,206

1,351

9,231
12,79
9

9,819
15,20
1

1,507
10,45
2
17,92
9

-6,788

-7,536

-7,842

8,182

3,944

4,779

6,662

8,712

8,546
10,50
1

1.1

1.3

1.5

1.7

2.2

3,944

4,779

5,825

6,660

7,019

7,479

7,766

8,009

WACC calculation

Values

Risk free rate

8.00%

Risk premium

6.00%

Beta

1.3

Cost of equity

15.50%

Post tax Cost of debt

11.00%

D/E ratio
WACC

Key Assumptions:
For calculation, we assume inflation adjusted economic growth rate as terminal growth rate
We have used Broker estimates and Thomson Reuter report to come up with a cost of capital figure
Revenue growth rate has been extrapolated from historic figures

0.25
14.40%

RECOMMENDATION
PV of CF

47,537

FCFF interminal year

17929

TV of CF

89701

FCFF
Net debt
FCFE
O/s shares
Value per share

1,37,239
15,214
1,22,025
1065
115

From valuation perspective, we found that the implied share price is greater than the
current market price and hence we are recommending the BUY decision.

Thank You