Dish TV has outperformed the sensex by 37%

Morgan Stanley has downgraded its rating on Dish TV to "equal-weight" from "overweight," saying current valuations are too expensive and factor in good progress the DTH (direct-to-home) service provider is making on subscriber additions, cost reductions and ARPU (average revenue per user) growth.

"Dish TV has outperformed the sensex by 37% year-to-date...We see little scope for substantial positive surprise for the street. Nor do valuations suggest upside to us," analysts Vipul Prasad and Ketaki Kulkarni said in a report on Wednesday.

However, the analysts didn’t go in for a sharper downgrade as they feel Dish TV will be among the bigger beneficiaries amidst the ongoing digitization in India.

"We expect 22% CAGR in average net subscriber base in fiscal 2011-13, implying about 25% gross incremental market share," Prasad and Kulkarni said.

Dish TV currently has a market share of around 31%. While the total number of subscribers will grow, year-on-year growth is expected to fall this fiscal due to a high base of people who have already shifted to DTH, the two analysts said.