22 September 2017 Update | Sector: Media

Dish TV India BSE SENSEX S&P CNX 32,370 10,122 CMP: INR78 TP: INR106(+36%) Buy Cost synergies not fully factored in stock price Expect healthy EBITDA growth for merged entity in FY19

Stock Info Bloomberg DITV IN DITV’s stock price has declined 27% in the last six months on weak revenue/EBITDA performance. Though ARPU expectations remain moderate and DD Free Dish remains a Equity Shares (m) 1,066 near-term risk, we believe the current stock price does not factor in the high synergies 52-Week Range (INR) 111 / 70 expected from the merger of Videocon D2H. We reiterate Buy. 1, 6, 12 Rel. Per (%) -3/-39/-36 M.Cap. (INR b) 83.1 M.Cap. (USD b) 1.3 Merger to provide stimulus to margins Avg Val, INRm 516 Videocon D2H’s merger should drive synergies of INR2.4b (340bp synergy gains) in Free float (%) 35.6 FY19 and INR4b (510bp synergy gains) in FY20, implying combined EBITDA of

Financials Snapshot (INR b) INR26.8b in FY19 and INR31.9b in FY20. Videocon’s high content cost of 40% of Y/E MARCH 2017 2018E 2019E total revenues (INR82/subscriber/month against DITV’s 30% or Net Sales 30.1 32.3 35.6 INR51/subscriber/month) should get rationalized. Additionally, GST of 18% as EBITDA 9.7 10.1 12.0 against 15% service tax and 6-7% entertainment tax should help save an additional Adj. NP 1.1 1.1 2.6 400-500bp. Adj. EPS (INR) 1.0 1.0 2.4

Adj. EPS Gr. % -84.2 -1.0 136.2 BV/Sh (INR) 4.6 5.6 8.0 DD Free Dish a near-term risk, but long-term economics unfavorable P/E (x) 76.1 76.8 32.5 DD Free Dish has drawn high interest from broadcasters in the recent auctions, P/BV (x) 16.9 13.9 9.7 posing a risk to current Pay TV subscribers and 40m-45m phase-IV analog EV/EBITDA (x) 9.4 9.1 7.2 subscribers yet to get digitized. We believe chasing advertisement revenue from RoE (%) 25.1 19.9 35.2 the FTA market at the cost of subscription revenue is unfavorable for broadcasters. RoCE (%) 25.5 16.9 25.5 Their loss of subscription revenue share from DD Free Dish subscribers is INR3.8b Shareholding pattern (%) higher than the corresponding FTA ad market opportunity. This would increase to As On Jun-17 Mar-17 Jun-16 INR13.3b, assuming 30m Phase-IV analog subscribers shift to DD Free Dish. Promoter 64.4 64.4 64.4 DII 8.2 8.2 7.3 ARPU under pressure in the near term, but should recover gradually FII 17.3 16.8 19.1 Others 10.1 10.6 9.3 DITV’s ARPU, which has been under pressure for 3-4 quarters, should gradually FII Includes depository receipts recover, as (a) the effects of demonetization wane, (b) HD contribution rises, (c) GST leads to better tax compliance by LCOs, and (d) competitive intensity Stock Performance (1-year) diminishes with consolidation. We expect flat ARPU in FY18 and build a moderate Dish TV Sensex - Rebased 2% ARPU CAGR over FY17-20. 116 102 OTT could take time share, but complete shift of users unlikely 88 OTT did not impact usage of Pay TV even during RJio’s free data period. RJio’s wireline launch could be a threat to DTH players. However, given that it will be 74 urban region specific, with slow scalability and high ARPU offerings, we believe 60 DTH operators should be insulated.

Jun-17 Sep-16 Sep-17 Dec-16 Mar-17 Attractively priced; below 6x on EV/EBITDA (including merger gains)

For the combined entity, we expect 9% revenue CAGR and 17% EBITDA CAGR over FY17-20. This is on the back of 8%/1% CAGR in net subscribers/ARPUs and including EBITDA synergies of INR2.4b/INR4b in FY19/20E. We believe merger synergies are not fully captured in valuations. DITV is valued at an EV of 6.4x

Aliasgar Shakir - Research analyst ([email protected]); +91 22 6129 1565 Hafeez Patel - Research analyst ([email protected]); +91 22 6129 1568 Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on www.motilaloswal.com/Institutional -Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital. Dish TV India

FY19E merged EBITDA of INR24.4b, excluding synergies. The stock is trading at an EV of 5.8x FY19E and 4.5x FY20E EBITDA if we factor merger synergies of INR2.4b in FY19 and INR4b in FY20 (significantly lower than the management’s expectation of INR5.1b synergies in FY19). We remain positive on DITV, with a TP of INR106 (8x FY19E EBITDA of INR26.8b including merger synergies of INR2.4b).

Exhibit 1: Valuation (INR m) FY19E FY20E

Dish + Videocon

EBITDA (excl. synergies) 24,372 27,898 Market Cap 1,44,670 1,44,670 Net Debt 10,896 -2,318 Enterprise Value 1,55,566 1,42,352 EV/EBITDA (x) 6.4 5.1 EBITDA Synergies 2,443 4,056 EBITDA (incl synergies) 26,815 31,954 Enterprise Value 1,55,566 1,42,352 EV/EBITDA (x) 5.8 4.5 Target Multiple (x) 8.0 8.0 Enterprise Value 2,14,522 2,55,636 Net debt 10,896 (2,318) Market Cap 2,03,626 2,57,954 No of Shares (m) 1,924 1,924 Target Price (INR) 106 134 CMP (INR) 78 78 Upside (%) 36% 72%

Source: Company, MOSL

Exhibit 2: Dish TV India – 1-year forward EV/EBITDA trend EV/EBDITA (x) Peak( x) Avg (x) Median (x) Min (x) 50 44.9

38

26 14.4 14 12.3 7.3

2 Jul-16 Jan-11 Jun-10 Jun-13 Apr-12 Apr-15 Sep-11 Feb-14 Sep-14 Feb-17 Sep-17 Nov-09 Nov-12 Nov-15 Mar-09 Source: MOSL, Company

22 September 2017 2

Dish TV India

FY19/20 – 300-500bp margin jump for merged entity.  Merger synergies: Expect content and backend cost synergies of INR4b by FY20: DITV has indicated operating cost synergies of INR1.8b in FY18 and INR5.1b in FY19. DITV and Videocon D2H both have healthy subscriber market share of 25% and 20%, respectively and operate at similar EBITDA margin of 30- 33%. However, the disparity in cost efficiency in multiple line items offers strong opportunity for cost synergies. We have factored in cost efficiency of INR2.4b in FY19 and INR4b in FY20, largely from content and backend operations.

1) Content cost: DITV’s content cost stands at 33% of subscription revenue (INR51/subscriber/month) compared to Videocon D2H’s 44% of subscription revenue (INR82/subscriber/month). The broadcasters’ share of subscription revenue is 25%. In the recent earnings release, DITV indicated that it has started renegotiating for its content costs and has already reduced costs with a large broadcaster. In the next couple years, the merged entity should be able to reduce content cost by INR2b, translating to 260bp margin improvement on the back of lower content cost for Videocon D2H subscribers.

Exhibit 3: Content cost per subscriber per month (INR)

Dish TV Videocon 82 82 76 76 75 75 66 66 57 59 56 53 55 52 51 52 52 52 FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E Source: MOSL, Company

Exhibit 4: Content cost as a % of subscription revenue

Dish TV Videocon 64.6

48.8 43.7 40.5 41.1 41.5 41.5 40.3 39.6

36.6 35.5 33.9 33.1 33.4 33.0 31.4 30.3 32.2 FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E Source: MOSL, Company 2) Backend cost reduction: Non-discretionary costs like employee, customer support, corporate overheads and promotional campaigns should also drive synergy gains. We have factored INR2b synergy gains from the same. We have not built synergy gains from transponder cost, given limited fungibility and our belief that the company will retain them. Even if the company sheds excess transponder capacity, it will take time for the benefits to get captured.

22 September 2017 3 Dish TV India

 GST to give room: DTH operators have a 300bp tax saving due to GST – the current GST rate of 18% is less than the combined 21-22% tax rate earlier (15% service tax + 6-7% state entertainment tax). In the current hyperactive market condition, this will provide room to DTH operators to chase market share and still improve EBITDA margin.

DD Free Dish a near-term risk, but long-term economics unfavorable  Broadcasters’ loss of subscription revenue to chase FTA market should restrict DD Free Dish cannibalization: For Broadcasters, we believe, chasing advertisement revenue from the FTA market is not favorable. Their loss of subscription revenue share from DD Free Dish subscribers is INR3.8b higher than the corresponding FTA ad market opportunity. This would increase to INR13.3b, if the remaining Phase-IV analog subscribers shift to DD Free Dish. Assuming a monthly ARPU of INR150, at current 25m DD Free Dish subscribers, the market size is INR45b. Assuming 25% broadcasters’ share, the subscription revenue loss due to Free Dish subscribers works out to INR11.2b. Against this, the FTA market excluding auction price would be ~INR8b (as per FICCI-KPMG 2017 report) – a shortfall of INR3.8b. We understand there are 40m-45m analog subscribers in Phase-IV. If the broadcasters’ FTA content adds 30m analog subscribers to DD Free Dish, they could lose INR24.8b subscription revenue. Against this, even if the FTA ad market jumps 50%, it would still imply INR13.3b deficit. Economics do not favor chasing FTA ad revenue at the cost of Pay TV subscription.  DTH operators to negotiate with broadcasters for content differentiation: Based on our recent discussions with DTH operators, we understand that they are engaging with broadcasters to adhere to the time gap between broadcasting content on Pay TV v/s FTA channels. Zee has indicated that it has a clear policy of not showcasing Pay TV content on FTA channels until the series is discontinued – a time gap of 18-20 months. Our recent channel checks with Star also highlight its attempts to protect Pay TV subscription revenue. While in the next 3-4 quarters, there could be pressure from Free Dish, we believe this does not pose a key long-term risk.

Exhibit 5: C&S and Pay TV households

C&S subs (m) Pay TV subs (m) 192 197 178 186 169 166 160 155 161 139 149 139 145 147 149 123 130 121 130 116 108 115

2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E

Source: FICCI-KPMG reports, MOSL

22 September 2017 4 Dish TV India

Exhibit 6: DD Free Dish subscribers growing 31 31 31 29

22

15 10 8 8 9 9

2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E

Source: FICCI-KPMG reports, MOSL

Exhibit 7: Break-up of Pay TV subscribers

Digital cable subs (m) DTH subs (m) Analog subs (m) 1 1 1 1 10 47 84 86 65 78 81 70 68 71 69 74 54 65 44 37 40 84 34 68 76 79 82 31 45 28 25 29 37 5 6 19 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E Source: FICCI-KPMG reports, MOSL

Exhibit 8: Net industry adds in Cable & DTH segment

Digital cable subs (m) DTH subs (m) Analog subs (m) 23 17 12 13 9 8 8 10 8 6 4 4 7 1 1 3 3 3 3 2 3 3 0 3 3 0

-1 -4 -5 -5 -9 -18

-37 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E Source: FICCI-KPMG reports, MOSL

Exhibit 9: DTH player-wise market share (%)

2010 2016

31

24 23 20 20 20 17 17 10 7 8 2

Dish TV Airtel Videocon D2H Tata Sky Sun Direct Reliance Big TV

Source: TRAI, MOSL, Company

22 September 2017 5 Dish TV India

Exhibit 10: FTA channels’ viewership share by genre v/s Pay TV (%)* 81

37 26 19 6 4 2 2 1 0 0 0 0 Kids Music Sports News English Movies Movies Regional Regional Hindi GEC Hindi News English GEC Hindi Movies English News Infotainment Regional GEC *Mar-Jul’16 Source: EY report-India’s Free TV

Exhibit 11: DD Free Dish channels as on July-17 Genre Channels Hind GEC  Rishtey, Sony Pal, Star Utsav, Zee Anmol, Zee Hindustan, Big Magic, Enterr 10,  Zee Anmol Cinema, Star Utsav Movies, Rishtey Cineplex, Sony Wah, B-4U Hindi Movies Movies, WOW Cinema, Housefull Movies, Movie House, Cinema TV, Manoranjan Movies, Maha Movie, Movie House, RT Movies  Aaj Tak, ABP News, Zee News, News Nation, News18 India, Russia Today, News News 24, India TV, India News, APN News, Lok Sabha, Rajya Sabha Sports  Star Sports First Devotional  Sanskar, Aastha TV, Ashtha Bhajan Music  9XM, 9X Bajao, 9X Jalwa, Mastiii, B-4U Music, , MTV Beats, Sony Mix, Dillagi Kids  Maha Cartoon TV Online shopping  Home Shop 18, Naaptol Blue  Chardikla Time TV, Dangal, Sadhna National,ETV Rajasthan, ETV UP/ Regional Uttarakhand, Dabangg, Bhojpuri Cinema, Big Magic Ganga  DD-National, DD Rajasthan, DD Urdu, DD Girnar, DD Bangla, DD News, DD Oriya, DD Malayalam, DD Yadagiri, DD Sports, DD Podhigai, DD Bihar, DD MP, DD DD channels Saptagiri, DD Kisan, DD Punjabi, DD UP, DD India, DD Bharati, DD Sahyadri, DD Chandana, DD North East Source: Freedish, MOSL

ARPU under pressure in the near term, but should recover gradually  Dish TV worst impacted due to demonetization: In the last 6-8 quarters, the disparity in performance between DITV and peers has been high. One of the key factors that over two-third of DITV’s subscribers are in the rural region, which has seen prolonged impact of demonetization. Also, free data streaming offered by RJio impacted low ARPU subscribers’ usage. The resistance of price increase by rural subscribers constrained DITV’s ability to take ARPU increase.  HD subscription to aid ARPU improvement: In the last 2-3 years, to contain subscriber acquisition cost, unlike peers, DITV did not feed HD set top boxes to consumers except for HD subscribers. Hence, its HD set top box penetration remains lower. It is now aggressively promoting HD subscription, which has reached 15% and is growing steadily. Increase in HD penetration, which has 1.5- 2x of current ARPU, will insulate DITV from the near-term Free Dish impact.  Consolidation to reduce competitive intensity: Based on our channel checks, dealers are promoting churn, with high subsidy and promotional 2-3 month offers. Consolidation should reduce competitive intensity. DITV has reduced freebies in long-term plans from 30-40% to 10-20% for 6-12 month plans.

22 September 2017 6 Dish TV India

 GST to increase LCOs’ tax compliance, force ARPU increase: Most LCOs that have remained outside the ambit of service tax may be compelled to increase ARPUs, with GST-led higher tax compliance. This could improve the overall CAS industry’s Pay TV subscription growth.  Building moderate ARPU outlook; no quick fix: With hyper active market conditions and pressure from DD Free Dish, ARPUs may remain constrained in the near term. We have factored flat ARPU growth in FY18 and build a moderate 2% ARPU growth over FY19-20.

Exhibit 12: ARPU to remain flat (DITV) Exhibit 13: Combined ARPU to increase

Net subs (m) ARPU (INR) Net subs (m) ARPU (INR) 174 172 157 164 154 155 158 162 175 140 137 150 171 170 168

5.7 8.5 9.6 10.7 11.4 12.9 14.5 15.5 16.5 17.7 18.9 28.4 30.7 33.3 35.7 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E Source: MOSL, Company Source: MOSL, Company

Exhibit 14: Strong recovery in ARPU (in 1QFY18, DITV)

Net subs (m) ARPU (INR)

172 177 179 173 160 165 165 169 166 170 171 172 164 165 162 156 159 157 152 148 134 9.8 10.0 10.5 10.7 10.8 11.0 11.2 11.4 11.7 12.1 12.5 12.9 13.3 13.7 14.0 14.5 14.9 15.2 15.3 15.5 15.7 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18

Source: MOSL, Company

Exhibit 15: Net subscriber adds to remain steady (DISH) Exhibit 16: Combined net subscriber adds to improve

2.6 2.4 2.3 2.8 2.0

1.5 1.6 1.4 1.3 1.1 1.1 1.0 1.0 1.1 0.7 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY17 FY18E FY19E FY20E FY18E FY19E FY20E

Source: MOSL, Company Source: MOSL, Company

22 September 2017 7 Dish TV India

Exhibit 17: Changing trend in net subscriber adds (DITV)

0.5 0.5 0.4 0.4 0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18

Source: MOSL, Company

Exhibit 18: Subscription revenue growth to regain momentum (DITV) Exhibit 19: Combined subscription revenues to get a fillip Subscription revenue (INRb) Yoy growth (%) Subscription revenue (INRb) Yoy growth (%) 10.7 42.8 10.3 41.6 39.5

6.6 15.6 13.9 16.3 27.7 11.0 9.6 9.5 7.0 2.7 -2.0 8.4 11.9 16.6 19.2 21.9 25.5 28.3 29.6 32.5 35.6 55.8 59.4 65.8 72.5 FY17 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E FY18E FY19E FY20E

Source: Company, MOSL Source: Company, MOSL

Exhibit 20: Resurgence in growth of subscription revenues (DITV)

Subscription revenue (INRb) Yoy growth (%)

21 17 16 14 16 15 14 14 14 16 15 13 11 13 9 7 2 5 6.2 -3 -5 -11 4.6 4.7 4.9 5.0 5.3 5.4 5.6 5.6 5.9 6.2 6.5 6.8 6.8 6.9 7.1 7.0 7.3 7.3 6.9 6.9 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18

Source: Company, MOSL

Phase-IV digitization gains to remain moderate Based on discussions with broadcasters and DTH companies, we understand there are still 40m-45m analog subscribers in Phase-IV region yet to be digitized. Given the lower Pay TV affordability of Phase-IV consumers, competition from DD Free Dish, and LCOs retaining subscribers on analog system, subscriber growth for DTH operators is likely to remain moderate. In its recent ConCall, DITV guided net 1m subscriber addition and flat ARPU in FY18. This is far lower than the pre- demonetization subscriber addition guidance of 1.5m-1.9m.

22 September 2017 8 Dish TV India

Exhibit 21: Status of digitization (December 2016) Regulatory sunset date No. of C&S subs (m) Non Digitised Base (m) % Digitisation Phase I Jun'12 14 0.2 100% excluding Chennai Phase II Mar'13 28 0.3 100% excluding parts of TN Phase III Jan'17 44 5 ~90% Phase IV Mar'17 83 42 ~50% Total 169 47 ~70% Source: FICCI-KPMG reports, MOSL

Exhibit 22: Phase-wise subscribers digitized (m) 2013 2014 2015 2016 Phase I 8 11 12 14 Phase II 14 21 24 28 Phase III 2 18 31 39 Phase IV 1 19 29 41 Total 25 69 96 122 Source: FICCI-KPMG reports, MOSL

OTT could take time share, but complete shift of users unlikely Before Jio was launched, the average Indian household watched TV for ~290 minutes per day. Even during the free usage period of Jio, the minutes of TV viewership per household did not decline. Thus, the increase in OTT viewership post Jio’s launch has been incremental usage. Cord-cutting in India is still far away due to the (a) significant cost arbitrage for consumers due to low TV ARPU, and (b) limited local content on other platforms. RJio’s wireline launch could be a threat to DTH players. However, given that it will be urban region specific, with slow scalability and high ARPU offerings, we believe DTH operators should be insulated.

Exhibit 23: Classification based on Pay and Product preference (2016) Customer Segment % OTT customers* 1 Premium + tactical OTT 8 Base + 2 (40+ a-la-carte) 22 Base + 1 (15-40 a-la-carte) 47 Base and up to 15 a-la-carte Base pack only 5

Free DTH + terrestrial 17 *Combination of households and individuals Source: EY report-India’s Free TV

Tariff order in limbo TRAI’s tariff orders and interconnect regulations to bring in transparency and non- discrimination in broadcaster-distributor contracts has been contested by Star India, Tata Sky and Airtel in multiple High Courts. We understand whichever party loses will go to the Supreme Court. The tariff order will remain under litigation for some time. While the regulation will protect consumer interest and increase transparency, the key concern is that it limits the DTH company’s value proposition and product customization capability, making it a pure agent between the broadcaster and consumer. However, given that it will allow DTH operators to charge INR130/subscriber of network capacity fee and 20-35% of subscription revenue, they should be compensated for the current ARPUs.

22 September 2017 9 Dish TV India

Exhibit 24: Broadcasters’ share of TV industry subscription revenues to remain stable TV industry (INR b) Broadcaster share (%) 30 28 29 26 27 25 23 24 25 22 22 23

187 213 245 281 320 361 387 426 494 579 672 771

2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E Source: FICCI-KPMG reports, MOSL

Building 9%/17% revenue/EBITDA CAGR In the near term, revenue growth might remain constrained in the backdrop of hyperactive market conditions and competition from DD Free Dish, which has slowed subscriber growth and impaired DITV’s ability to take ARPU increase. This could drive moderate revenue growth of 9% over FY17-20, largely fueled by subscriber growth. However, the combined EBITDA should grow at a steady 17% on the back of merger synergy gains.

Exhibit 25: Proforma income statement of the merged entity (INR m) FY19E FY20E Dish TV Videocon Synergies Merged Dish TV Videocon Synergies Merged Net Subscriber base 17.7 15.5 33.3 18.9 16.8 35.7 Monthly ARPU 158 187 171 162 191 175 Income from operations Subscription revenue 32,477 33,300 - 65,777 35,568 36,951 - 72,520 Other operating revenue 3,080 2,928 - 6,008 3,526 3,090 - 6,615 Total 35,557 36,228 - 71,785 39,094 40,041 - 79,135 % yoy growth 0 0 0 Expenditure Content cost 10,703 13,404 1,151 22,957 11,453 14,615 2,069 23,999 as % of sales 30% 37% 32% 29% 37% 30% License fees 2,501 2,898 - 5,399 2,739 3,203 - 5,942 as % of sales 7% 8% 8% 7% 8% 8% Transponder cost 2,090 1,650 - 3,740 2,153 1,699 - 3,852 as % of sales 6% 5% 5% 6% 4% 5% Other operating exps 1,596 680 72 2,204 1,676 714 200 2,190 as % of sales 4% 2% 3% 4% 2% 3% Employee Cost 1,709 1,449 215 2,943 1,846 1,602 399 3,048 as % of sales 5% 4% 4% 5% 4% 4% Other expense (SG&A) 4,953 3,779 1,005 7,727 5,420 4,118 1,389 8,149 as % of sales 14% 10% 11% 14% 10% 10% Total 23,552 23,860 2,443 44,969 25,286 25,951 4,056 47,181 EBITDA 12,005 12,368 26,815 13,808 14,090 31,954 % yoy growth 15% 14% 19% EBITDA margin 34% 34% 37% 35% 35% 40%

Depreciation 7,650 6,372 - 14,023 7,725 6,358 - 14,083 EBIT 4,354 5,996 12,793 6,083 7,732 17,871 Other Income 890 95 - 985 1,579 146 - 1,725 Interest 1,371 2,428 - 3,799 1,371 2,298 - 3,669 PBT 3,873 3,663 9,979 6,291 5,580 15,927 Tax 1,317 1,099 3,393 2,139 1,674 5,415 Tax Rate (%) 34 30 34 34 30 34 PAT 2,556 2,564 6,586 4,152 3,906 10,512

22 September 2017 10 Dish TV India

Valuation and view Attractively priced; below 6x on EV/EBITDA (including Videocon merger gains): We believe merger synergies are not fully captured in valuations. DITV is valued at an EV of 6.4x FY19E merged EBITDA of INR24.4b, excluding synergies. The stock is trading at an EV of 5.8x FY19E and 4.5x FY20E EBITDA if we factor merger synergies of INR2.4b in FY19 and INR4b in FY20 (significantly lower than the management’s expectation of INR5.1b synergies in FY19). We remain positive on DITV, with a TP of INR106 (8x FY19E EBITDA of INR26.8b including merger synergies of INR2.4b).

Exhibit 26: Valuation (INR m) FY19E FY20E Dish + Videocon EBITDA (excl. synergies) 24,372 27,898 Market Cap 1,44,670 1,44,670 Net Debt 10,896 -2,318 Enterprise Value 1,55,566 1,42,352 EV/EBITDA (x) 6.4 5.1 EBITDA Synergies 2,443 4,056 EBITDA (incl synergies) 26,815 31,954 Enterprise Value 1,55,566 1,42,352 EV/EBITDA (x) 5.8 4.5 Target Multiple (x) 8.0 8.0 Enterprise Value 2,14,522 2,55,636 Net debt 10,896 (2,318) Market Cap 2,03,626 2,57,954 No of Shares (m) 1,924 1,924 Target Price (INR) 106 134 CMP (INR) 78 78 Upside (%) 36% 72% Source: Company, MOSL

Exhibit 27: Dish TV India – 1-year forward EV/EBITDA trend EV/EBDITA (x) Peak( x) Avg (x) Median (x) Min (x) 50 44.9

38

26 14.4 14 12.3 7.3

2 Jul-16 Jan-11 Jun-10 Jun-13 Apr-12 Apr-15 Sep-11 Feb-14 Sep-14 Feb-17 Sep-17 Nov-09 Nov-12 Nov-15 Mar-09

Source: MOSL, Company

22 September 2017 11 Dish TV India

Financials and Valuation (Dish TV India, ex-merger)

Income Statement (INR Million) Y/E March 2013 2014 2015 2016 2017 2018E 2019E 2020E Net Sales 21,668 24,258 26,880 30,599 30,144 32,327 35,557 39,094 YoY (%) 10.7 12.0 10.8 13.8 -1.5 7.2 10.0 9.9 Operating expenses 15,873 18,745 19,548 20,350 20,416 22,225 23,552 25,286 Cost of goods and services 11,010 13,098 13,884 14,006 13,202 14,222 15,294 16,344 Employee Cost 822 891 1,018 1,229 1,465 1,582 1,709 1,846 Selling & distribution exps 3,036 3,321 3,339 2,836 3,108 3,371 3,347 3,733 Administrative exps 1,005 1,436 1,308 2,280 2,640 3,050 3,202 3,363 EBITDA 5,795 5,513 7,331 10,249 9,728 10,102 12,005 13,808 EBITDA margin (%) 26.7 22.7 27.3 33.5 32.3 31.2 33.8 35.3

Depreciation 6,276 5,973 6,138 5,907 6,631 7,432 7,650 7,725 Interest 1,284 1,327 1,754 2,087 2,239 1,371 1,371 1,371 Other Income 512 660 635 640 475 341 890 1,579 PBT -1,252 -1,127 75 2,895 1,334 1,639 3,873 6,291 Tax 0 0 42 -4,029 241 557 1,317 2,139 Tax rate (%) 0.0 0.0 56.4 -139.2 18.1 34.0 34.0 34.0 Adjusted PAT -1,252 -1,127 33 6,924 1,093 1,082 2,556 4,152 Change (%) -21.2 -10.0 NA NA -84.2 -1.0 136.2 62.4 Exceptional items 594 -415 0 0 0 0 0 0 Reported PAT -658 -1,542 33 6,924 1,093 1,082 2,556 4,152

Balance Sheet (INR Million) Y/E March 2013 2014 2015 2016 2017 2018E 2019E 2020E Share Capital 1,065 1,065 1,066 1,066 1,066 1,066 1,066 1,066 Share Premium 15,378 15,378 15,418 15,434 15,440 15,440 15,440 15,440 Reserves -17,996 -19,569 -19,617 -12,693 -11,600 -10,518 -7,962 -3,810 Net Worth -1,553 -3,126 -3,134 3,807 4,906 5,988 8,544 12,696 Loans 16,330 14,095 14,839 12,313 11,428 11,428 11,428 11,428 Differed Tax Liability 0 0 0 -4,360 -5,100 -5,100 -5,100 -5,100 Capital Employed 14,777 10,969 11,705 11,760 11,234 12,316 14,872 19,024

Gross Fixed Assets 35,790 40,187 47,329 56,764 64,455 72,007 79,194 86,033 Less: Depreciation 21,449 26,616 32,790 38,664 45,252 52,684 60,334 68,060 Net Fixed Assets 14,340 13,571 14,539 18,100 19,203 19,323 18,859 17,973 Capital WIP 6,535 4,226 4,972 6,100 7,868 7,868 7,868 7,868 Investments 2,782 2,000 2,000 2,320 1,644 1,644 1,644 1,644

Curr. Assets 7,891 7,905 10,153 8,513 8,793 8,793 14,231 21,917 Inventory 86 75 99 126 131 177 195 214 Debtors 304 415 637 725 869 709 779 857 Cash & Bank Balance 3,645 3,427 4,287 3,392 2,923 2,859 7,705 14,741 Loans & Advances 3,856 3,989 5,131 4,271 4,871 5,048 5,553 6,105

Current Liab. & Prov. 16,773 16,733 19,958 23,274 26,274 25,312 27,731 30,379 Creditors & Other liabilities 10,099 8,230 9,221 10,950 11,807 12,027 13,119 14,313 Provisions 6,674 8,503 10,737 12,324 14,468 13,285 14,612 16,066

Net Current Assets -8,882 -8,828 -9,805 -14,761 -17,481 -16,520 -13,500 -8,461 Application of Funds 14,777 10,969 11,705 11,760 11,234 12,316 14,872 19,024 E: MOSL Estimates

22 September 2017 12 Dish TV India

Financials and Valuation (Dish TV India, ex-merger)

Ratios Y/E March 2013 2014 2015 2016 2017 2018E 2019E 2020E Adjusted EPS -1.2 -1.1 0.0 6.5 1.0 1.0 2.4 3.9 Growth (%) -21.3 -10.0 -102.9 NA -84.2 -1.0 136.2 62.4 Cash EPS 4.7 4.6 5.8 12.0 7.2 8.0 9.6 11.1 Book Value -1.5 -2.9 -2.9 3.6 4.6 5.6 8.0 11.9 DPS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Payout (incl. Div. Tax.) (%) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Valuation P/E 12.0 76.1 76.8 32.5 20.0 Cash P/E 6.5 10.8 9.8 8.1 7.0 EV/EBITDA 8.9 9.4 9.1 7.2 5.7 EV/Sales 3.0 3.0 2.8 2.4 2.0 Price/Book Value 21.8 16.9 13.9 9.7 6.5

Profitability Ratios (%) RoE NM NM NM NM 25 19.9 35.2 39.1 RoCE NM NM NM NM 25.5 16.9 25.5 29.8 RoIC NM NM NM NM 39.9 24.3 43.1 98.4 Turnover Ratios Debtors (Days) 5 6 9 9 11 8 8 8 Inventory (Days) 1 1 1 1 2 2 2 2 Creditors. (Days) 198 142 169 185 193 181 188 192 Asset Turnover (x) 2.3 3.1 4.8 5.3 4.4 4.1 4.8 8.2

Leverage Ratio Debt/Equity (x) -6.4 -2.8 -2.7 1.7 1.4 1.2 0.2 -0.4

Cash Flow Statement Y/E March 2013 2014 2015 2016 2017 2018E 2019E 2020E PBT -660 -1,576 74 2,895 1,334 1,639 3,873 6,291 Depreciation 6,388 5,974 6,138 5,907 6,631 7,432 7,650 7,725 Others -834 78 178 81 -16 0 0 0 Net Interest Paid 757 676 980 1,428 1,655 1,031 481 -208 Direct Taxes Paid -82 -60 -99 -199 -1,240 -557 -1,317 -2,139 (Inc)/Dec in Wkg. Cap. 526 1,964 404 1,211 -160 -1,026 1,826 1,998 CF from Op.Activity 6,095 7,055 7,675 11,324 8,204 8,519 12,514 13,668

(inc)/Dec in FA + CWIP -6,980 -2,986 -7,057 -9,081 -8,612 -7,552 -7,187 -6,839 (Pur)/Sale of Investments -1,241 831 24 -287 729 0 0 0 Others 2,858 1,993 3,425 3,760 2,837 1,530 2,079 2,768 CF from Inv.Activity -5,363 -162 -3,608 -5,608 -5,045 -6,022 -5,107 -4,071

Issue of Shares 18 3 35 17 6 0 0 0 Inc/(Dec) in Debt 1,896 -3,987 364 -2,870 -495 0 0 0 Interest Paid -691 -625 -761 -666 -657 -1,371 -1,371 -1,371 Other Financing Activities -1 0 0 0 0 0 0 0 CF from Fin.Activity 1,222 -4,610 -362 -3,519 -1,145 -1,371 -1,371 -1,371

Inc/(Dec) in Cash 1,953 2,283 3,705 2,197 2,013 1,125 6,035 8,226 Add: Opening Balance 1,692 1,144 582 1,195 909 1,733 1,669 6,515 Closing Balance 3,645 3,427 4,287 3,392 2,923 2,859 7,705 14,741 E: MOSL Estimates

22 September 2017 13 Disclosures: The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations). Motilal Oswal Securities Ltd. (MOSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOSL, the Research Entity (RE) as defined in the Regulations, is engaged in the Dishbusiness TV of providing India Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOSL is a subsidiary company of Motilal Oswal Financial Service Ltd. (MOFSL). MOFSL is a listed public company, the details in respect of which are available on www.motilaloswal.com. MOSL is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Metropolitan Stock Exchange Of India Ltd. (MSE) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) & National Securities Depository Limited (NSDL) and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products. Details of associate entities of Motilal Oswal Securities Limited are available on the website at http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf

Pending Regulatory Enquiries against Motilal Oswal Securities Limited by SEBI: SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold inquiry and adjudge violation of SEBI Regulations; MOSL requested SEBI to provide all documents, records, investigation report relied upon by SEBI which were referred in Show Cause Notice and also sought personal hearing. The matter is currently pending. MOSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOSL and/or its associates and/or Research Analyst may have beneficial ownership of 1% or more securities in the subject company at the end of the month immediately preceding the date of publication of the Research Report. MOSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (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.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOSL even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report. Research Analyst may have served as director/officer, etc. in the subject company in the last 12 month period. MOSL and/or its associates may have received any compensation from the subject company in the past 12 months. In the last 12 months period ending on the last day of the month immediately preceding the date of publication of this research report, MOSL or any of its associates may have: a) managed or co-managed public offering of securities from subject company of this research report, b) received compensation for investment banking or merchant banking or brokerage services from subject company of this research report, c) received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report. d) Subject Company may have been a client of MOSL or its associates during twelve months preceding the date of distribution of the research report. MOSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOSL 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. MOSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware that MOSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. Terms & Conditions: This report has been prepared by MOSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOSL will not treat recipients as customers by virtue of their receiving this report. 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.

Disclosure of Interest Statement Dish TV India . Analyst ownership of the stock No A graph of daily closing prices of securities is available at www.nseindia.com, www.bseindia.com. Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary trading desk of MOSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOSL research activity and therefore it can have an independent view with regards to subject company for which Research Team have expressed their views. 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 MOSL & its group companies to registration or licensing requirements within such jurisdictions.

For Hong Kong: This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.

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: Disclaimer: The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOSL, its associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already available in publicly accessible media or developed through analysis of MOSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. The person accessing this information specifically agrees to exempt MOSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSL 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. Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Compliance Officer: Neeraj Agarwal, Email Id: [email protected], Contact No.:022-30801085. Registration details of group entities.: MOSL: NSE (Cash): INB231041238; NSE (F&O): INF231041238; NSE (CD): INE231041238; BSE (Cash): INB011041257; BSE(F&O): INF011041257; BSE(CD); MSE(Cash): INB261041231; MSE(F&O): INF261041231; MSE(CD): INE261041231; CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser: INA000007100. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) offers wealth management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal Commodities Broker Pvt. Ltd. offers Commodities Products. * Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private Equity products

22 September 2017 14