Nomura expects continued growth momentum from Zee Entertainment in 1QFY14, while for Dish TV it expects higher concentration of content cost which will subdue the quarterly operating outcome
In the media sector, Zee Entertainment is expected to have robust growth momentum led by domestic subscription, but advertisement growth is expected to be muted, says Nomura Equity Research in its report.
For Zee, Nomura has estimated a top-line growth of 13.9%, EBITDA margin of 26.1% and net profit growth of 14% y-y. Nomura expects international revenue to grow by 3.3% y-y on account of depreciation of rupee.
Nomura points out that Zee’s 4QFY13 domestic subscription revenue benefitted from incremental revenue from content negotiation between Dish TV and Media Pro for full FY13. For Dish TV, content cost concentration is expected to be higher in 1Q, with no risk to the full-year content cost increase assumption of 10% in FY14.
Nomura has forecast results for Zee as given below:
Nomura expects Dish TV to report sales growth of 11.7% y-y led by average revenue per user (ARPU) increase from Rs157 in 4QFY13 to Rs163 in 1QFY14. ARPU declined from Rs160 in 3QFY13 to Rs157 in 4QFY13 on account of down trading and lower number of days in 4Q vs 3Q (February effect). So, assuming a base case of Rs159 (post down trading), it is estimated that there will be a Rs4 increase in ARPU on account of part of the package price increase (effected by the company in April-13). DTH (direct to home) companies have increased the prices of their set top box (STB), which has resulted in an increase in the price differential between the STB price of DTH companies and MSOs.
Dish TV has cash and cash equivalent of $40 million. Since the USD/INR has increased by 5.1% from end of 4QFY13 to the end of 1QFY14, Nomura expects increased other income of Rs274 million in 1Q.
Similarly, Nomura has forecast results for Dish TV as given below:
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