TRAI has revised DTH licence fee from 10% of GR to 8% of AGR. Reported EBITDA margin to increase by ~290bp. However cash flow impact is negative as currently cash licence fee payout is only ~6% of revenue, in line with the current legal understanding. Buy

1. Shobhit Khare (Shobhit.Khare@MotilalOswal.com); +91 22 3982 5428
23 July 2014
Update | Sector: Media
Dish TV India
CMP: INR60 TP: INR75 Buy
TRAI licence recos EBITDA positive but cash negative
Upgrading EBITDA by ~11%; Retrospective liability remains sub-judice
 New licence fee recommendations by TRAI would prospectively reduce
licence fee provision from ~10.4% of revenue to ~7.5% of revenue.
 Reported EBITDA margin to increase by ~290bp driving ~11% upgrade in
our EBITDA estimates. However cash flow impact is negative as currently
cash licence fee payout is only ~6% of revenue, in line with the current
legal understanding. FY15 cash flow impact estimated at ~0.4b.
 Maintain Buy with revised target price of INR75/sh vs INR78 earlier.
DTH licence fee revised from 10% of GR to 8% of AGR
TRAI has recommended DTH licence fee at 8% of adjusted gross revenue (AGR)
for new/renewed DTH licences as compared to 10% of gross revenue earlier.
AGR would be calculated by excluding service tax, entertainment tax and other
taxes. These recommendations, if accepted by the government, would be
applicable with effect from October 2013 for Dish TV as its earlier licence period
ended in September 2013. There has been a dispute regarding methodology for
licence fee calculation and the matter is currently sub-judice. As a result, DITV is
currently making licence fee provision at ~10% of gross revenue but making
payment at ~6% of gross revenue, in line with current legal understanding.
New licence fee regime EBITDA accretive but cash flow negative
Currently DITV’s licence fee provision made in P&L amounts to ~10.4% of
reported revenue (10% of gross revenue) while actual cash payment is
estimated at ~6.2% of reported revenue. Under the new regime, post deduction
of entertainment tax (which constitutes ~6% of reported revenue), effective
licence fee under the new regime would be ~7.5% of reported revenue. Hence,
while licence fee provision in P&L will decline by ~290bp, the actual cash outgo
pertaining to licence fee would increase by ~130bp. For example, as compared
to FY15 licence fee provision of ~INR2.8b and cash outgo of ~INR1.7b, the
revised licence fee would be ~INR2.05b (please refer table on page 2).
Retrospective licence fee liability of ~INR8.4b remains sub-judice
DITV has an accumulated retrospective licence fee liability of ~INR8.4b due to
lower cash payment vs government demand. While this liability pertains to
earlier licensing regime and remains sub-judice, there would be a significant
decline in the liability if TRAI’s new licence fee regime were to be applied
retrospectively. We have not factored any cash outgo pertaining to the
retrospective liability.
Upgrading EBITDA by ~11%; downgrade TP from INR78 to INR75
We are upgrading our EBITDA estimates by ~11% but downgrading DCF based
target price from INR78 to INR75. Our revised target price incorporates higher
cash outlay towards licence fee but factors lower WACC (12.5% vs 13% earlier)
to reflect lower perceived risk in the licence fee regime.
BSE Sensex S&P CNX
26,147 7,796
Stock Info
Bloomberg DITV IN
Equity Shares (m) 1,064.9
52-Week Range (INR) 65/40
1, 6, 12 Rel. Per (%) 3/-2/-23
M.Cap. (INR b) 63.7
M.Cap. (USD b) 1.1
Financial Snapshot (INR Billion)
Y/E March 2015E 2016E 2017E
Net Sales 27.4 31.6 36.3
EBITDA 7.4 9.5 12.8
Adj. NP 0.3 2.3 5.8
Adj. EPS (INR) 0.3 2.2 5.4
BV/Sh (INR) -2.6 -0.4 5.0
RoCE (%) 11.3 26.7 51.4
Valuations
P/E (x) NA 26.9 10.8
EV/EBITDA (x) 9.8 7.4 5.0
EV/Sub (INR) 5,619 4,980 4,248
Shareholding pattern (%)
As on Jun-14 Mar-14 Jun-13
Promoter 64.5 64.5 63.6
DII 2.3 4.9 4.4
FII 19.1 19.5 21.0
Others 14.1 11.0 11.1
Note: FII Includes depository receipts
Stock Performance (1-year)
40
49
58
67
76
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
DishTV
Sensex - Rebased
Investors are advised to refer through disclosures made at the end of the Research Report.

2. Dish TV India
23 July 2014 2
Change in licence fee regime: EBITDA and cash flow impact calculation (INR b)
FY15E FY16E
Revenue 27.4 31.6
Earlier licence fee provision (~10.4% of revenue) 2.8 3.3
New licence fee (~7.5% of revenue) 2.1 2.4
Saving in licence fee 0.8 0.9
Earlier EBITDA 6.6 8.6
Revised EBITDA 7.4 9.5
EBITDA upgrade (%) 11.6 10.5
Earlier licence fee paid (~6.2% of revenue) 1.7 2.0
New licence fee (7.5% of revenue) 2.1 2.4
Increase in cash outflow 0.4 0.4
Source: Company, MOSL
DITV: Summary of estimate change
FY15E FY16E FY15E FY16E
Gross subscribers (m) Revenue (INR b)
Old 19.1 21.6 Old 27.4 31.6
New 19.1 21.6 New 27.4 31.6
Change (%) 0.0 0.0 Change (%) 0.0 0.0
Net subscribers (m) Operating costs
Old 12.8 14.1 Old 20.8 23.1
New 12.8 14.1 New 20.0 22.2
Change (%) 0.0 0.0 Change (%) -3.7 -3.9
Gross adds (m) EBITDA (INR b)
Old 2.5 2.5 Old 6.6 8.6
New 2.5 2.5 New 7.4 9.5
Change (%) 0.0 0.0 Change (%) 11.6 10.5
Net adds (m) Net Profit (INR b)
Old 1.4 1.3 Old -0.4 1.5
New 1.4 1.3 New 0.3 2.3
Change (%) 0.0 0.0 Change (%) NA 56.5
ARPU (INR/month) Depreciation (INR b)
Old 176 185 Old 6.1 6.2
New 176 185 New 6.1 6.2
Change (%) 0.0 0.0 Change (%) 0.0 0.0
Annual churn (% of net subs) Net Finance Cost (INR b)
Old 9 9 Old 1.5 1.4
New 9 9 New 1.6 1.5
Change (bp) 0 0 Change (%) 1.1 3.9
CPE capex/gross add (INR) EBITDA Margin (%)
Old 2,709 2,655 Old 24.2 27.0
New 2,709 2,655 New 27.0 29.9
Change (%) 0.0 0.0 Change (bp) 281 284
Source: Company, MOSL

3. Dish TV India
23 July 2014 3
DISHTV: A Snapshot
Key Assumptions FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
Gross subscribers (m) 7 10 13 15 17 19 22 24
YoY (%) 36 51 24 18 9 15 13 12
Gross adds (m) 1.8 3.5 2.5 2.3 1.4 2.5 2.5 2.5
YoY (%) -12 93 -30 -6 -38 75 0 0
Net subscribers (m) 5.7 8.5 9.6 10.7 11.4 12.8 14.1 15.2
YoY (%) 32 50 13 11 6 13 10 8
Net adds (m) 1.4 2.8 1.1 1.1 0.7 1.4 1.3 1.1
YoY (%) -22 106 -60 -2 -40 114 -11 -12
Monthly churn (%) 7.4 7.9 11.4 8.5 4.8 6.0 6.0 6.0
ARPU (INR) 140 140 153 157 165 176 185 197
YoY (%) -3 0 10 3 5 7 5 6
Prog & content costs (INR b) 4.6 5.2 6.1 6.5 7.8 8.4 9.3 10.2
% of revenue 42 36 31 30 32 31 29 28
EBITDA margin (%) 9 17 25 27 23 27 30 35
CPE capex/gross add (USD) 47 46 46 46 46 45 44 43
CPE capex/subscription revenue (%) 49 62 34 32 18 26 22 18
Revenue Mix
Revenue (INR b) 10.8 14.4 19.6 21.7 24.3 27.4 31.6 36.3
YoY % 47 32 36 11 12 13 16 15
Subscription revenue (%) 77 83 85 89 90 94 95 96
Lease rentals (%) 14 14 11 7 4 2 1 0
Others (%) 9 3 4 4 6 4 5 4
Source: Company, MOSL

4. Dish TV India
23 July 2014 4
Financials and valuations
Income Statement (INR Million)
Y/E March 2013 2014 2015E 2016E 2017E
Net Sales 21,668 24,258 27,389 31,650 36,287
YoY (%) 10.7 12.0 12.9 15.6 14.7
Operating expenses 15,873 18,745 19,997 22,193 23,444
Cost of goods and services 11,010 13,098 13,498 15,025 15,530
Employee Cost 822 891 980 1,078 1,186
Selling & distribution exps 3,036 3,321 4,199 4,677 5,214
Administrative exps 1,005 1,436 1,319 1,413 1,514
EBITDA 5,795 5,513 7,392 9,457 12,843
EBITDA margin (%) 26.7 22.7 27.0 29.9 35.4
Depreciation 6,276 5,973 6,091 6,216 6,504
Interest 1,284 1,327 1,564 1,491 1,122
Other Income 512 660 582 582 582
PBT -1,252 -1,127 319 2,332 5,799
Adjusted PAT -1,252 -1,127 319 2,332 5,799
Change (%) -21.2 -10.0 -128.3 630.4 148.6
Exceptional items 594 -415 0 0 0
Reported PAT -658 -1,542 319 2,332 5,799
Balance Sheet (INR Million)
Y/E March 2013 2014 2015E 2016E 2017E
Share Capital 1,065 1,065 1,065 1,065 1,065
Share Premium 15,378 15,378 15,378 15,378 15,378
Reserves -17,996 -19,531 -19,212 -16,880 -11,081
Net Worth -1,553 -3,089 -2,770 -437 5,361
Loans 16,330 14,460 14,823 12,990 7,456
Deffered Tax Liability 0 0 0 0 0
Capital Employed 14,777 11,371 12,054 12,553 12,817
Gross Fixed Assets 35,788 42,314 49,727 57,132 64,342
Less: Depreciation 21,449 27,422 33,513 39,729 46,233
Net Fixed Assets 14,339 14,891 16,214 17,404 18,109
Capital WIP 6,535 2,808 2,808 2,808 2,808
Investments 0 1,180 1,180 1,180 1,180
Curr. Assets 10,676 8,831 9,041 9,282 9,538
Inventory 86 75 84 98 112
Debtors 304 415 468 541 621
Cash & Bank Balance 6,403 5,399 5,399 5,399 5,399
Loans & Advances 3,883 2,943 3,090 3,244 3,406
Current Liab. & Prov. 16,773 16,339 17,189 18,121 18,817
Creditors 10,099 7,837 8,754 9,981 11,068
Provisions & other liab. 6,674 8,503 8,436 8,140 7,749
Net Current Assets -6,097 -7,508 -8,148 -8,839 -9,280
Miscellanous exp 0 0 0 0 0
Application of Funds 14,777 11,371 12,054 12,553 12,817
E: MOSL Estimates

5. Dish TV India
23 July 2014 5
Financials and valuations
Ratios
Y/E March 2013 2014 2015E 2016E 2017E
Basic (INR)
Adjusted EPS -1.2 -1.1 0.3 2.2 5.4
Growth (%) -21.3 -10.0 -128.3 630.4 148.6
Cash EPS 4.7 4.6 6.0 8.0 11.6
Book Value -1.5 -2.9 -2.6 -0.4 5.0
DPS 0.0 0.0 0.0 0.0 0.0
Payout (incl. Div. Tax.) (%) 0.0 0.0 0.0 0.0 0.0
Valuation
P/E NA NA NA 26.9 10.8
Cash P/E 12.5 13.0 9.8 7.3 5.1
EV/EBITDA 12.5 13.0 9.8 7.4 5.0
EV/EBITDA (excl lease rentals) 17.3 15.6 10.5 7.7 5.0
EV/Sales 3.4 3.0 2.6 2.2 1.8
Price/Book Value NA NA NA NA NA
EV/net subscriber (INR) 6,761 6,290 5,619 4,980 4,248
EV/net subscriber (USD) 112 104 93 83 71
Profitability Ratios (%)
RoE NA NA NA NA NA
RoCE 1.2 -5.3 11.3 26.7 51.4
Turnover Ratios
Debtors (Days) 5 6 6 6 6
Inventory (Days) 1 1 1 1 1
Creditors. (Days) 232 153 160 164 172
Asset Turnover (x) 2.7 3.7 5.3 5.5 5.9
Leverage Ratio
Debt/Equity (x) NA NA NA NA NA
Cash Flow Statement (INR Million)
Y/E March 2013 2014 2015E 2016E 2017E
Op.Profit/(Loss) bef Tax 6,390 5,098 7,392 9,457 12,843
Other Income 512 660 582 582 582
Interest Paid -1,284 -1,327 -1,564 -1,491 -1,122
Direct Taxes Paid 0 0 0 0 0
(Inc)/Dec in Wkg. Cap. 2,125 413 640 691 441
CF from Op.Activity 7,743 4,844 7,049 9,239 12,744
(inc)/Dec in FA + CWIP -9,061 -2,799 -7,413 -7,405 -7,209
(Pur)/Sale of Investments 1,500 -1,180 0 0 0
CF from Inv.Activity -7,562 -3,978 -7,413 -7,405 -7,209
Issue of Shares 43 0 0 0 0
Inc/(Dec) in Debt 2,327 -1,870 364 -1,833 -5,534
Dividends Paid 0 0 0 0 0
Other Financing Activities 0 0 0 0 0
CF from Fin.Activity 2,370 -1,870 364 -1,833 -5,534
Inc/(Dec) in Cash 2,552 -1,004 0 0 0
Add: Opening Balance 3,851 6,403 5,399 5,399 5,399
Closing Balance 6,403 5,399 5,399 5,399 5,399

6. Dish TV India
23 July 2014 6
Disclosures
This research report has been prepared by MOSt to provide information about the company(ies) and sector(s), if any, covered in the report and may be distributed by it and/or its affiliated company(ies). This
report is for personal information of the select recipient and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement to
invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been
furnished to you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into
account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable
for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and
investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur.
MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business
relationships with a significant percentage of the companies covered by our Research Department Our research professionals provide important input into our investment banking and other business selection
processes. Investors should assume that MOSt and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that
the research professionals who were involved in preparing this material may participate in the solicitation of such business. The research professionals responsible for the preparation of this document may
interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and interpreting market information. Our research professionals are paid in part based on the
profitability of MOSt which include earnings from investment banking and other business. MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from
maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, MOSt generally prohibits its analysts and persons reporting to analysts from serving as an
officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or affiliates may provide oral or written market commentary or trading
strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with
the recommendations expressed herein. In reviewing these materials, you should be aware that any or all o the foregoing, among other things, may give rise to real or potential conflicts of interest . MOSt and
its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies) mentioned herein or (b) be engaged in
any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or
lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.
Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to
hold MOSt or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The
information contained herein is based on publicly available data or other sources believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the
data, information and/or opinions provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not
intended to be a complete statement or summary of the securities, markets or developments referred to in the document. While we would endeavor to update the information herein on reasonable basis, MOSt
and/or its affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its
affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. MOSt or any of
its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of
merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.
Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its
contents.
MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of
Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.
Disclosure of Interest Statement DISH TV INDIA LTD
 Analyst ownership of the stock No
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or
will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible
for preparation of MOSt research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to
law, regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.
For U.K.
This report is intended for distribution only to persons having professional experience in matters relating to investments as described in Article 19 of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 (referred to as "investment professionals"). This document must not be acted on or relied on by persons who are not investment professionals. Any investment or investment activity to
which this document relates is only available to investment professionals and will be engaged in only with such persons.
For U.S.
Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States.
In addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state
laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein
are not available to or intended for U.S. persons.
This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional
investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major
institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as
amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has
entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be
executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer,
MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research
analyst account.
For Singapore
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors
Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore
to accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.
In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Anosh Koppikar Kadambari Balachandran
Email:anosh.Koppikar@motilaloswal.com Email : kadambari.balachandran@motilaloswal.com
Contact(+65)68189232 Contact: (+65) 68189233 / 65249115
Office Address:21 (Suite 31),16 Collyer Quay,Singapore 04931
Motilal Oswal Securities Ltd
Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com