Home >market >mark-to-market >Dish TV dishes out some good Q4 numbers

Dish TV India Ltd’s investors applauded the company’s swing to profit in the fourth quarter with a 14% jump in its shares on Tuesday. And why not? Dish TV’s net profit for the March quarter came in at 35 crore, far ahead of the 45 lakh profit that a Bloomberg poll of analysts had pegged.

Data from Capitaline shows that the company has posted a profit for three quarters (including the last one) in the last five years. But this time, Dish TV has made a profit on the basis of operational strength, point out analysts.

For the March quarter, revenue increased by about 19% year-on-year (y-o-y) to 755 crore. Subscriber additions and improvement in average revenue per user (Arpu) contributed to revenue growth. Net subscriber additions stood at 404,000, slightly lower than 416,000 subscribers added in the December quarter. High definition (HD)- driven sports offerings performed well in the March quarter driven by the Cricket World Cup 2015. HD subscribers account for 22-23% of incremental subscriber additions, said R.C. Venkateish, chief executive officer, Dish TV.

The company’s Arpu has increased continuously in the last fiscal year. For instance, in the March quarter, Dish TV’s Arpu stood at 179, an increase from 177 in the December quarter, 172 in the September quarter and 170 in the June quarter. Some factors that helped Arpu were price hikes and better revenue enjoyed on HD offerings.

Further, content costs as a percentage of revenue compared with the previous year’s March quarter fell slightly more than 400 basis points to 27.5%. One basis point is one-hundredth of a percentage point. That, along with a decrease in other operating costs and other expenditure, boosted operating profit margin. Dish TV’s operating margin increased sequentially as well as y-o-y to 29.4%.

What next for the company? According to Venkateish, the company intends to add 1.4-1.7 million net subscribers in the current fiscal year and is looking at a 6-7% Arpu increase. Pack price hikes and higher HD uptake should aid Arpu expansion in future.

While that should assist revenue growth, the outlook on content costs is favourable, too. The company has entered into long-term contracts with large broadcasters for content and considering that major renewals are not expected anytime soon, Dish TV anticipates mid-single digit growth in content costs. This should augur well for profit margins. Of course, investors would have to watch out how these factors play out from a near-to-medium term perspective. For now, March quarter results will keep analysts busy upgrading earnings estimates. So far this calendar year, the Dish TV stock has gone up a nice 43%, including the bonanza on Tuesday.

The writer does not own shares in the above-mentioned companies.

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