Dish TV’s muted guidance a worry, but it’s still a good long-term bet

ET Intelligence Group: India’s largest subscribed direct-to-Home (DTH) service provider Dish TV’s latest financial performance was in line with the Street expectations. In FY16, the company’s revenues grew 13.8% to Rs 3,050 crore from a year ago, while deferred tax expense of more than Rs 400 crore caused it to notch a net profit of Rs 692 crore against Rs 3.1 crore in the previous fiscal.

For FY16, Dish TV, which has a subscriber base of 14.5 million and market share of 25%, showed growth of 15.4% in its subscription revenues to Rs 2,827 crore. Its operating profit grew 39.8% YoY to Rs 1,024 crore. Interestingly, average revenue per user (ARPU) grew in the range of 3-5% to Rs 174 in FY16 from Rs 168 in FY15.

For FY17, a key factor for investors is the management’s commentary on net subscriber addition. It expects to gain net subscribers of 1.5 million in the current fiscal and increase ARPU in the range of 3-5%.


This is muted guidance. To a large extent, it means that the management foresees lower growth in sales and profit for FY17. One of the key reasons for this is increased competition. Analysts had pencilled in net subscribers’ addition in the range of 1.8-2.1 million. So, the estimates for the company’s revenues and earnings may be revised downwards.

Considering FY18 estimates, the company is trading at a PE multiple of 22 times, quite attractive given its FY16 PE of 28.4. Since Dish TV is the only listed DTH company, investors can buy it with an investment horizon of at least two years.