GTPL Hathway IPO – Should you invest?

GTPL-Hathway-IPO-Should-you-invest-minGTPL Hathway IPO – Should you invest?


Several mainline IPO’s are in queue now in Jun-2017. Gujarat based GTPL Hathway IPO would open for subscription on 21st June, 2017. GTPL Hathway Ltd is leading regional MSO in India, offering cable television and broadband services. Its revenues grew at 18% CAGR in last 3 years. Several forums discussing about GTPL Hathway IPO Date for some time. What are the positive factors in GTPL Hathway IPO? Are there any hidden factors in GTPL Hathway Ltd IPO?  Whether GTPL Hathway IPO Price is reasonably priced? In this article, I would provide some interesting insights and do GTPL Hathway IPO Review.

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About GTPL Hathway Ltd


They are a leading regional MSO in India, offering cable television and broadband services. They are the number 1 MSO in Gujarat with a market share of 67% of cable television subscribers in 2015, accounting for approximately 3.7 million of 5.6 million cable television households in Gujarat. They are the number 2 MSO in Kolkata and Howrah in west Bengal with a market share of 24% of cable television subscribers in this market in 2015, accounting for approximately 0.7 million of 3.0 million cable television households in Kolkata and Howrah. Gujarat is an important market for broadcasters and advertisers as it contributed to more than a 5% viewership share on an all-India basis and more than 8% of the Hindi speaking market in India in 2015. They accounted for a 14% share of the total cable carriage and placement fee market in India in Fiscal 2016.

GTPL Hathway IPO Issue details


  • GTPL Hathway IPO open date: 21-Jun-2017
  • GTPL Hathway IPO close date: 23-Jun-2017
  • Face Value: Rs 10 per share
  • Issue price band: Rs 167 to Rs 170 per share
  • Issue size: Rs 484 Crores
  • GTPL Hathway IPO Lot size: 88 shares and in multiples of 88 shares there-of.
  • Minimum investment: Rs 14,696 on lower price band
  • Leading Managers: JM Financials, BNP Paribas, Motilal Oswal and Yes Securities.
  • Listing: BSE / NSE
  • Download GTPL Hathway IPO RHP Prospectus at this link.

Objects of the GTPL Hathway Ltd IPO issue


1) The Offer for Sale: Company will not receive any proceeds from the Offer for Sale by the Selling Shareholders and the proceeds received from the Offer for Sale will not form part of the Net Proceeds.

2) Repayment/pre-payment, in full or part, of certain borrowings

3) General corporate purposes.

4) Company expects to receive the benefits of listing of the Equity Shares on the Stock Exchanges.

Company Financials (reinstated-consolidated)


  • The company generated revenue of Rs 528.8 Crores for the year ended Mar-14 and Rs 746.2 Crores for the year ended Mar-16.  For 9 months ended Dec-16, it earned revenue of Rs 663.4 Crores.
  • The company posted a loss of Rs 8.4 Crores for the year ended Mar-14 and profit of Rs 4.6 Crores for the year ended Mar-17. It posted profit of Rs 16.3 Crores.
  • Its restated basic EPS for FY ending Mar-16 is Rs 8.09 and last 3 years EPS was Rs 5.93.

Financial Summary of GTPL Hathway IPO

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What are GTPL Hathway Key Strenghts?


Here are GTPL Hathway strengths.

  • One of the leading regional MSOs with significant market share in Gujarat and Kolkata.
  • High quality infrastructure network.
  • Balanced local and regional content offering to attract and retain subscribers.
  • Strong traction on digitization.
  • Successful track record of identifying, acquiring and integrating MSOs, ISOs and LCOs.
  • Experienced Promoters and management team with proven execution track record backed by Hathway, one of India’s leading MSOs.

What are GTPL Hathway Limited Key Strategies?


Company is focusing on few key strategies.

  • Grow subscriber base in its existing markets and enter into new geographies.
  • Increase primary subscriber base.
  • Increase its focus on high quality digital offerings and the provision of regional content.
  • Increase its broadband offering and subscriber base.

Reasons to invest in GTPL Hathway IPO


  • Company revenues grew at 18% CAGR in last 3 years.

Risk Factors / Reasons not to invest in a GTPL Hathway Ltd IPO


  • Company profits are inconsistent. It incurred loss for FY14, thin profits for FY16 and again its profits zoomed to 2.5% for 9 months ended Dec-16. Investors should invest in consistent earning companies.
  • There are various proceedings involving Company, Directors, Subsidiaries, Promoters and Group Companies, which if determined against them, may adversely affect its business.
  • They are required to obtain certain approvals, licenses, registrations and permissions for operating its business, and the failure to obtain them in a timely manner, or at all, could adversely affect its business, results of operations and financial condition.
  • TRAI may soon auction all available spectrum of frequencies in the wireless 700 MHz band for use in the telecommunication sector. Telecommunication companies to which such spectrum is allocated will carry out wireless transmission in those frequencies, which may lead to interference of signals in the coaxial pockets of its networks and limit its transmission to the spectrum of up to the 700 MHz frequency or require us to adopt technological systems to stop such interference. This may adversely affect its business, results of operation and financial condition  they may be unable to keep pace with changes in technology and existing and future technological developments may allow new competitors and alternative competitive platforms to emerge.  
  • They may be unsuccessful in implementing new value-added services for its digital cable service subscribers its holding company, Hathway, is engaged in business activities which compete with its business.  
  • The Telecommunication (Broadcasting and Cable) Services Tariff Order, 2017 was notified by TRAI on March 3, 2017. The new tariff regime introduced by the Tariff Order may have a significant impact on future ARPUs, pay TV economics, its pricing model, operational flexibility and results of operations.
  • Its business model is capital intensive and they may not be able to arrange adequate funds for future capital expansion.
  • The cable television distribution industry is highly competitive, which affects its ability to attract and retain subscribers.
  • The success of its broadband services may be slotheyd or halted by competition from wireless internet or fixed broadband offerings in India.
  • Other risk factors (Internal and external) can be viewed in the draft prospectus.

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Recommendation / Investment strategy – GTPL Hathway IPO


On the upper price band of Rs 170 and on consolidated FY16 EPS of Rs 8.09, P/E ratio works out to 21x. Even based on last 3 years consolidated EPS of Rs 5.29, P/E ratio works out to 32x. Means, company is asking higher price band of Rs 170 in the P/E ratio of 21x to 32x. Its listed peers like Hathway Cable, Den Networks and Siticable are running under losses, hence their P/E ratio cannot be compared with this issue. One more peer Ortel communication is trading at P/E ratio of 19.8x, hence we can conclude that GTPL Hathway IPO Price is highly priced.

Company revenues grew at 18% CAGR in last 3 years. It earned thin profits of 0.6% for FY16. Surprisingly its profits are zoomed to 2.5% for 9 months ended Dec-16. GTPL Hathway IPO price is highly priced. Most of the companies in this industry are incurring losses. Considering all these factors, investors should stay away from such high risk IPO’s which do not leave anything for investors.

Disclaimer: I do NOT have an interest in investing in this IPO. The idea of giving positive and negative factors to investors in this article is to create awareness and education about this IPO. One should NOT constitute this as investment advice to buy or not to buy. Please consult your investment advisor before you invest in such high risk investment options.

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Suresh

GTPL Hathway IPO – Should you invest

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