Value tips for Stock Market : Dish TV as the valuation is expensive

Dish TV as the valuation is expensive – Target Price Rs.75

 current market price of Rs.85 range, Dish TV appears expensive and the price would decline to Rs.75 in one year. Hence, it looks better to pare exposure in the stock.

 The company has reported strong result for 1QFY12. Revenue grew 51% yoy with profit
margins improving to 24.4%. Net loss has been reduced to Rs.18.3 crore.

 The company has added 7.2 lakh subscribers during the quarter and the subscriber acquisition cost has been reduced by 7.5%.

 However, programming cost has increased above the expected level due to renewal of two content agreements.

 Sales commissions were lower due to reduction in commission rates and lower new connection sales.

 increase in inactive subscribers is a major concern and this has led to a decline in net addition to 4 lakh subscribers, the lowest in the last five quarters. Inactive subscribers issue may continue for another two quarters.

 Strong performance of the company business, target price of the stock has been reduce only Rs.75 from the earlier estimate of Rs.40. However, the current price is higher than the target price and the stock is looking expensive at the current rate.