As of January 31, 2017, GTPL Hathway had around 5.69 million active digital cable subscribers.
GTPL Hathway, a regional cable TV distribution and internet service provider, is offering its shares to public for subscription through an initial public offer (IPO). The GTPL Hathway IPO opened for subscription on Wednesday. The IPO, which is a mix of both fresh issue and an offer for sale by existing promoters, will be open for three days through Friday, June 23. GTPL Hathway's Rs 485-crore IPO is priced in a band of Rs 167-170 and can be subscribed in lots of 88 shares. The company has raised Rs 145 crore from six anchor investors on Tuesday. The issue was subscribed 3 per cent as of 1:00 p.m.
Here are five things to know about the issue:
-Through this IPO, GTPL Hathway aims to raise Rs 240 crore, out of which, Rs 229 crore will be used for repayment or part-payment of its existing loans, while the remaining will be used for general corporate purposes. Its existing promoters are also offering 1.44 crore shares to public through this IPO. After this issue, promoter holding in the company will reduce to 73.7 per cent from 98.9 per cent now.
- GTPL was incorporated in 2006 by merging the cable TV service business in Ahmedabad and Vadodara. In 2007, Hathway acquired a 50 per cent stake in the business. GTPL Hathway is a leading regional multi-system operator (MSO) in India, offering cable television and broadband services with a market share of 67 per cent in cable television subscribers in Gujarat. It is the number 2 MSO in Kolkata and Howrah, West Bengal with a market share of 24 per cent of cable television subscribers.
- GTPL's primary source of revenue is subscription income received from subscribers and placement/carriage income received from broadcasters for carrying their channels. As of January 31, 2017, GTPL Hathway had around 5.69 million active digital cable subscribers and 1.05 million broadband subscribers. Between FY13 and FY16, its revenue has growth at a CARG of 23 per cent to Rs 844.6 crore. However, its net profit and operating profit have not shown any consistent trend in last the fiscal years and has been very volatile. In the first nine months of last fiscal year, GTPL Hathway reported a net profit of Rs 45 crore on revenues of Rs 689 crore.
-At the upper end of price band, GTPL Hathway shares are valued at 3.1 times their annualised FY2017 book value (in comparison, Den Networks shares are valued at 1.8 times, Hathway Cable & Datacom at 0.7 times, Ortel Communications at 1.4 times and Siti Networks at 4.8 times), according to domestic brokerage Angel Broking. The brokerage has a 'neutral' rating on the issue. "The cable industry is already undergoing a period of weak performance and with disruptive pricing of new entrants, there is a high probability that the performance may weaken further," the brokerage said.
Angel Broking has cited some investment concerns for GTPL Hathway IPO:-None of the players in the cable industry within peer group have reported profits in last 3-5 years
-GTPL's cable business contributes around 80 per cent of its total revenue, which is a risk as it is dependent on local cable operators
-GTPL has low asset turnover ratio and in order to remain competitive, it will need to continuously upgrade technology
-New entrants at a pan-India level in broadband and DTH business may lead to further pricing pressure for the company