Dish TV India: Target price revised tad lower to Rs 37

Dish TV India’s Q1FY20 Ebitda at Rs 530 crore beat our/consensus estimates on lower license fee outgo (down Rs 50 crore in Q1; FY20E benefit at Rs 200 crore), as DTH players revised revenue reporting to net of content (pass-through). Ebitda was also aided by cost rationalisation across manpower and overheads (partially due to synergy benefits from d2h merger). Q1 net ARPU (ex-taxes) was at Rs 116 (gross comparable ARPU at Rs 199 vs Rs 186 q-o-q); monthly churn rate was stable at 0.9%.

The management lowered FY20 net subscriber addition guidance to Rs 0.07 crore (Rs 0.12 crore earlier), but maintained Ebitda guidance at Rs 2,250-Rs 2,300 crore; we fine-tune our FY20-21E Ebitda by 2-5%, revising TP to Rs 37 (Rs 40 earlier; 5x FY21E EV/core Ebitda). At CMP, the stock is available at 10% FCF/EV yield (including all contingencies; 17% yield otherwise) on FY21E. High promoter pledge remains the biggest risk to rating.