In the fall of 2011, somewhere in South Mumbai, a single line flashed on the computer.
“What do you think of DISHTV? Good buy?”
DISHTV, had already by then fallen quite a bit. From the highs of 140-150 it was trading at Rs 77-80. Once a darling, it was now hungrily eyed by investors and punters alike. Investors still believed in its “market opportunity” story and punters liked it for its volatility. On top of it, it was present on futures and options market as well. Optimists argued with an ever rising middle class and government’s push for digitization, DISHTV will have significant tailwinds. Coupled with the fact that DISHTV had access to easy programming content from Zee TV(its parent company), investors were merely biding for time.
In the mid week of August of 2011, I completed my thesis of DISHTV. The thesis
can be found here(some bug in dropbox preventing me from sharing a working link here). It didnt take a rocket scientist to conclude that not only the company was significantly overvalued even at those levels but also followed an inherently unsustainable business model. It could have been easily killed, if things went like this since they lost money on every connection.
Since then, the market consolidated, the pricing has increased, their revenues improved and yet their inherent profitability levels were lower than ever before.