Investment Analysis Report - Dish TV: A 10-Bagger Opportunity**

Prepared by: Sapal Bhaiya

Executive Summary:

Dish TV, India's second-largest DTH company, presents a compelling investment opportunity
despite its historical governance issues under the Essel Group. The company is now
undergoing a transformative phase with new ownership, a revamped board of directors, and
promising growth prospects.

Business Overview:

Dish TV boasts a robust business with 2 crore subscribers and an annual EBITDA of Rs
2400 crore, driven by an impressive 61% EBITDA margin. Its strategic strengths include a
significant presence in rural areas, where affordability and fiber availability remain limited, as
well as a competitive edge over cable TV services.

Recent Developments:

- Essel Group's shareholding in Dish TV has significantly decreased due to pledged shares
being taken over by banks. The promoter stake currently stands at a mere 6%, with Yes
Bank holding 25.5%, HDFC at 4.75%, and smaller creditors controlling 11% of the company.

- Governance concerns surfaced when Dish TV diversified into content production with
Watcho, an OTT platform, diverting significant funds without proper explanation. The
auditors raised concerns about unexplained intangible assets and capital advances.

- The promoters attempted a rights issue of Rs 1000 crore at par to increase their stake in
the company, which faced strong opposition from major creditors, including Yes Bank.

Change in Leadership:

Yes Bank proposes to replace the current board with a highly reputable one, featuring
individuals like Girish Paranjpe, former CEO of Wipro, Vijay Bhatt, a retired KPMG senior
partner, and Haripriya Padmanabhan, a distinguished Supreme Court lawyer. The
introduction of this new board is expected to address governance issues, bring in fresh
management, and ensure transparent reporting.

Investment Potential:

- Dish TV, with a market cap of Rs 2700 crore, currently trades at a low valuation of 0.8x
EV/EBITDA, despite its EBITDA margins trailing competitors.

- Assuming a 5% growth and improved EBITDA margins of 65%, the business could report a
Rs 3500 crore EBITDA in the next two years.
- Comparatively, Bharti's purchase of Airtel Dish at 8X EV/EBITDA suggests significant
upside potential for Dish TV, potentially becoming a ten-bagger.

Risks:

1. Competition Risk: Competition from Airtel and Tata Sky, which have stronger
management, poses a challenge.

2. Market Change: The shift from traditional television to OTT platforms in metro areas could
affect Dish TV's market share.

3. Market Risk: General market fluctuations could impact Dish TV's stock price.

4. Funding Concerns:Despite consistent EBITDA generation, the company may require

additional funds to remain competitive.

5. Board Change Uncertainty: The success of changing the board is not guaranteed, and the
stock's performance may depend on this outcome.

Conclusion:

Dish TV, despite its historical governance issues, presents an intriguing investment
opportunity with the potential to deliver significant returns. The company's new ownership,
board, and growth prospects make it a compelling prospect for investors willing to navigate
associated risks. This investment case also underscores the changing landscape of
corporate governance and minority shareholder protection in India.