Dish TV is one of those stocks which have flattered to deceive. Despite great promise, the stock has not fired owing to its high debt levels and heavy losses. You can see that reflected in the stock price. Despite the surging rally, Dish TV is down about 10% YOY.
But is there light at the end of the tunnel? Is it the right time to buy Dish TV?
Ashish Chugh of Hidden Gems, who specializes in finding stocks which are on the verge of a turnaround, believes so.
In a short but succinct research report, Ashish Chugh called Dish TV an “excellent annuity business available at reasonable valuations”. He pointed out that Dish TV has started generating Free Cash Flows from FY13 onwards and that this would increase going forward. He emphasized that as the subscriber base was increasing significantly, and the major costs were fixed in nature, the incremental revenue would boost the ARPUs.
He explained this concept further in an interview to ETNow.
There are several other believers in the Dish TV story.
Motilal Oswal has pointed out that Dish TV is trading close to multi-year low valuations with an EV/EBITDA of 10.3x FY15 and 7.8x FY16. It recommended a buy on the basis that market share recovery, price hike and content leverage would drive growth.
Elara Capital is also bullish on the stock. It pointed out that FY15 promised a trend reversal on all the three counts that were adverse to the company and that the stock is due for a re-rating. It also pointed out that at ~7x FY16E EV/EBITDA, Dish TV’s valuations are attractive and likely to improve as Dish TV progresses over turning PAT positive in FY15.
Goldman Sachs has also come out with all guns blazing in favour of Dish TV. It emphasized that there are several catalysts lined up and that the risk-reward ratio was favourable for a buy.
Given that so many savvy investors are rooting for the stock, it may be a good idea to start nibbling on the stock on a SIP basis. If you wait for the green shoots to be visible before making a commitment, it may be too late.