Rs 600 Crore debt repayment in the next 6 months: Mr Anil Dua, Group CEO, Dish TV

Update on the Indian Equity Market:

On Tuesday, NIFTY50 closed 0.7% lower at 11,857. None of the sectors ended in green. The top losing sectors were Media (-1.9%), PSU Bank (-1.6%), Metal (-1.4%) and IT (-1.4%). The gainers among the stocks were Bajaj Finance (+1.3%), Hindustan Unilever (+1.1%), and Cipla (+1.1%). The top losers were Yes Bank (-10.4%), Zee Entertainment Enterprises (-5.1%), and GAIL (-4.4%).

Excerpts from an interview with Mr Anil Dua, Group CEO, Dish TV, published in Livemint dated 10^th December 2019:

• There has been a downgrade from CARE on the short-term bank facility due to a delay in a ₹250 crore short-term loan. This is a temporary downgrade, due to the bunching of some payments.
• The company has paid ₹ 850 crores in the last eight months and will pay another ₹ 600 crore in the next six months. This repayment will include the ₹ 250 crore delayed payment.
• Once the debt is less than ₹ 2,000 crore level, they will be comfortable as their Earnings before Interest, taxes, depreciation and amortisation (EBITDA) is more than ₹2,000 crores.
• They plan to repay about ₹ 800 crores next year as well. This repayment will mostly be done by internal accruals. The company is hoping to get alternate credit facilities to finance their regular capex so that utilisation of cash flow can be normalised towards debt repayment.
• Talking about the business environment in the new tariff regime, he said the transitional disruption has now settled down.
• They hope to continue building on their subscriber base and investing into the future with new products such as their new android box.
• With revenue of more than ₹ 6,000 crores and EBITDA of more than ₹ 2,000 crores, they expect an improvement in EBITDA margins as seen in the last quarter.
• The Videocon merger has helped realise synergies in interest cost, power cost, logistics, transport and administration. They expect to realise more synergies in content cost, which has been impacted by the new tariff order.

Consensus Estimate (Source: market screener website)

• The closing price of Dish TV India was ₹ 13/- as of 10-December-19. It traded at 21 x/8.7 x/ 5.4 x the consensus EPS of ₹ 0.6 /1.5 /2.4 for FY20E/FY21E/FY22E respectively.          
• Consensus target price of ₹ 27.8/- implies a PE multiple of 12x on FY22E EPS of ₹ 2.6.