BackDish TV: dilution fears seem overdone
Dish TV: dilution fears seem overdone
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Dish TV India Ltd’s stock rose 4.3% on Monday to ₹ 65 on news reports that the company has got clearance from the Foreign Investment Promotion Board (FIPB) to increase overseas equity to around ₹ 980 crore.
In an interview to CNBC-TV18, Salil Kapoor, chief operating officer of Dish TV, said, “We have taken this approval only to position ourselves for any advance plans. The great opportunity is digitization, but no plans as of now because it’s just approval that we have taken to position ourselves for that money in case it is required." As of now, there is no decision on how much to raise and at what point to raise, he added.
The firm’s net loss for the September quarter was higher at ₹ 49 crore against a net loss of ₹ 18 crore in the June quarter, primarily on account of a forex loss of ₹ 30 crore.
The good news was total operating revenue rose about 5% sequentially to ₹ 482 crore and operating profit by 8.6% to ₹ 122 crore. Operating performance was better due to the decline in programming and content costs, and other operating expenses.
Dish TV intends to exit the current fiscal with average revenue per user (Arpu) of ₹ 160-165. The recent price hike is expected to help the company achieve its Arpu guidance for the year-end.
Long-term growth prospects, as a consequence of the capital-raising, should overcome fears of dilution. As an HDFC Securities Ltd report says, “Valuation remains attractive at 8.5x FY13E EV/Ebitda (earnings before interest, tax, depreciation and amortization), considering superior growth of 33/63% in revenue/Ebitda over FY11-14E."
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