Expected profitability levels of DTH companies to provide re-rating trigger: Prakash Diwan

In a chat with ET Now, Prakash Diwan, Director, Altamount Capital Management shares his views on DTH companies. Excerpts:

ET Now: Coming to the media companies, particularly the DTH and the cable companies, Videocon had announced today the listing of their business. There is an expectation that Tata Sky may do so in the next 12 months. Will this be a good technical trigger for stocks like Dish, Hathway, Den Networks and may be Siti Cable.

Prakash Diwan: Videocon is talking about a Rs 700 crore listing, which is really not very significant in terms of scale that it could obtain. Of course it is one of the smallest players in the segment also, but what is going to be interesting is the kind of discipline that finally we have seen in the third round and the fourth round among most of these cable operators and companies.

It is something that is really going to have a lot more impact on their margins rather than the top line growth. So my sense is that you will probably see a major shift in the profitability levels that we have been expecting from these companies in the next two to three quarters and that could probably be a re-rating trigger.

Dish TV at current levels has consolidated well enough, we have seen a fair amount of distribution between at Rs 45 to Rs 60-62 zone and of course it has gone higher and come back. There would be enough takers for the next leap from Rs 62 levels to may be about Rs 85-89. That is what some of the reports have also started talking about and I would agree with the kind of re-rating that this entire segment would attract for itself.