>Dish TV (Macquarie Research)

 We transfer coverage of this stock to Nitin Mohta from Shubham Majumder.
We upgrade Dish TV to Outperform from Neutral and raise our target price to
Rs45 from Rs11.6.
Impact
 Expect DTH industry to add 10m subscribers in each of the next three
years. Based on our interaction with the managements of various DTH
operators, we remain confident of our industrywide subscriber addition
forecasts. We expect Dish to remain the market leader for the next five years,
despite an assumed decline in net adds market share from 25.6% in FY3/09
to 22% in FY3/10E and thereafter. (Please see Figure 6.)
 EBITDA expected to treble in FY3/12 from FY3/10E level. Dish has
delivered positive EBITDA for three consecutive quarters, clearly surprising us
and the Street positively. We now forecast EBITDA margins to double to
20.1% in FY3/11 from 9.3% in FY3/10E. Despite assuming no major uptick in
margins in FY3/12 (20.5%), we forecast EBITDA to increase by over 3x to
Rs3.7bn from Rs1bn in FY3/10E.
 Positive investment view based on strong improvement in operating
cashflows, led by strong growth in subscriber base and tight cost
control. We expect Dish TV to add 4.4m subscribers over the next two years,
implying a CAGR of 27.4% in the subscriber base for FY3/10–12. Dish TV
management has done a commendable job in capping the content cost as a
percentage of subscription revenues by entering into fixed-price contracts; we
view this as the key reason for the sharp rise in EBITDA.
 Funding overhang removed. Sixty-four percent of the money raised in a
rights issue has been infused into the company, and we do not view funding
as a bottleneck to growth.

To read full report Dish TV (Macquarie Research)