Here's why Dish TV stock rallied 9% on Friday

In Friday’s trading session, Dish TV's stock witnessed increased activity after CLSA, a prominent brokerage firm, decided to maintain its outperform rating for the company.

Despite a lower-than-expected Q3 of FY24 revenue, CLSA remains optimistic about Dish TV's future, albeit with some adjustments to their estimates for the fiscal years 2024 to 2026.

CLSA reported a downward revision of 18% in revenue and 37% in EBITDA estimates for FY24-FY26 due to Dish TV's weaker performance in the third quarter. However, they simultaneously increased the target price for Dish TV from Rs 18 to Rs 24, emphasising the stock's affordability at 8 times FY25 EV to EBITDA.

One significant factor contributing to CLSA's positive outlook is Dish TV's achievement of becoming net debt-free in Q1 of FY24. The brokerage firm also highlighted the potential positive impact of an upcoming IPO and fundraise in the sector initiated by Tata Play. They believe this could result in a favourable ripple effect for Dish TV, further aiding the stock price.

Despite the overall optimism, CLSA emphasised a couple of caveats that investors should consider. They pointed out that a change in promoter ownership and sustained profitability could act as key catalysts for a re-rating of Dish TV's stock. However, the presence of a significant number of pledged promoter shares introduces an element of risk, potentially leading to heightened stock volatility.

On Friday, Dish TV's stock closed at ₹23.40 per share, marking an uptick of nearly 9%. The Mumbai-based company currently holds a market capitalization of ₹4,326 crore and has delivered robust returns of around 23% in the last six months.