Home >money >calculators >Dish TV serves up an appetizing December quarter

Shares of Dish TV India Ltd had underperformed considerably in 2014. The stock had gone up by 11% compared with a 35% rise in the S&P BSE 200 index last year. This year could be different. To begin with, the company on Thursday announced spectacular financial results for the quarter ended 31 December.

The direct-to-home services provider’s pre-tax loss for last quarter has dropped sharply to 2.87 crore compared with 8.25 crore in the year-earlier period and 15 crore in the September quarter. Decent revenue growth, strong operating profit performance and good other income growth are responsible for the commendable performance.

Subscriber addition was robust. Dish TV added 416,000 net subscribers in the December quarter, higher than 378,000 it added in the September quarter and 332,000 in the June quarter. Zing, a product for customers interested in regional content, is one reason for higher subscriber additions so far this fiscal year.

Dish TV’s average revenue per user (Arpu), too, has shown a consistent improvement this year, helped by price hikes. For the December quarter, Arpu increased to 177 from 172 in the September quarter and 170 in the June quarter. Also, a higher proportion of HD (high-definition) subscribers, which contribute higher revenue, has boosted the overall Arpu of the company.

A combination of robust subscriber additions and Arpu led to a 16.5% year-on-year (y-o-y) increase in Dish TV’s December quarter revenue to 714 crore. Revenue growth was the strongest in at least the past eight quarters.

Further, the company’s operating profit increased by 41% to 191 crore, as programming and content costs remained flat y-o-y, and other operating costs grew at a much slower rate. As a result, operating profit margins jumped 466 basis points to 26.7%. A basis point is one-hundredth of a percentage point.

Not surprisingly, the Dish TV stock rose 4.5% in reaction to the numbers. The company intends to add 1.5 million net subscribers in the year to March. For the next fiscal year, the expected third phase of digitization is likely to support higher subscriber additions. For investors, subscriber addition numbers and Arpu remain the key factors to monitor. Of course, they would rejoice if Dish TV manages to break even at the profit before tax level in the March quarter.

The writer doesn’t own shares in the above-mentioned companies.

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