Dish TV India Ltd reported a strong set of numbers for the quarter ended 31 March. Little wonder, the stock rose by 2% to Rs70 in reaction to the results on a day when the benchmark Sensex fell by 1.82%.
The firm has performed well on many fronts. It has managed to reduce losses at the net level in every quarter last fiscal. For the March quarter, stand-alone net loss stood at Rs37 crore, compared with Rs60 crore in the same period last year.
Operating profit more than doubled to Rs90 crore on a year-on-year basis. Operating profit margin improved sharply to 20.8% from 13.2% last year. March quarter operating margin was better than what the company reported in the preceding quarter as well as for the year as a whole.
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What were the reasons for the improved operating performance?
The first reason is the strong revenue growth of 43% to Rs433 crore. Revenue growth got a boost mainly because of the improvement in average revenue per user (Arpu) and the addition of one million subscribers during the quarter.
The company’s Arpu improved to Rs150 from Rs142 in the December quarter. Growth in Arpu was helped by the price hikes taken in the December quarter and upgrade to the premium bouquet products.
Another reason was that Dish TV’s content and other costs as a percentage of revenue fell drastically.
For the year as whole, Dish TV performed well. The company was able to restrict net losses to Rs190 crore for fiscal 2011 (FY11) from Rs262 crore in FY10.
In FY11, the company added 3.5 million subscribers and expects to add 3-3.5 million subscribers in the current fiscal as well.
Dish TV’s stock has delivered high returns to investors in the last fiscal. So far this fiscal, the stock has outperformed the BSE-200 Index of the Bombay Stock Exchange. In the current quarter, subscriber additions should be robust, thanks to the fourth season of the Indian Premier League.
Nevertheless, the stock seems to be factoring most of the positives at the current level and upsides could be limited in the near term.
Graphic by Yogesh Kumar/Mint
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