GTPL Hathway IPO Analysis

GTPL Hathway IPO

Company Profile

Incorporated in 2006, GTPL Hathway Limited is Gujrat based Multi System Operator offering cable television and broadband services. GTPL Hathway is number 1 cable service provider in Gujarat with a market share of 67% of cable television subscribers.

GTPL Hathway provides digital cable television services in 169 towns across India. We provide cable television signals in both digital and analog modes of re-transmission.

GTPL's source of revenue for cable services is subscription income received from subscribers and carriage and placement revenues received from broadcasters for carrying their channels and placing their channels on their preferred channel number or position. GTPL also have the right to place the 'Gujarat News' channel on our network, which is produced by our Group Company, Gujarat Television Private Limited. GTPL produce its own content and also offer third-party content on its local channels to ensure that it has a suitable mix of content that appeals to a range of demographics.

Company Promoters:

The Promoters of the company are:

1. Mr. Aniruddhasinhji Jadeja,

2. Mr. Kanaksinh Rana,

3. Gujarat Digi Com Private Ltd and

4. Hathway Cable and Datacom Ltd

Issue Details

Issue Open: Jun 21, 2017 - Jun 23, 2017 

Issue Type: Book Built Issue IPO 

Issue Size:  
› Fresh Issue of [.] Equity Shares of Rs 10 aggregating up to Rs 240.00 Cr
› Offer for Sale of 14,400,000 Equity Shares of Rs 10 aggregating up to Rs [.] Cr

Face Value: Rs 10 Per Equity Share 

Issue Price: Rs 167 - Rs 170 Per Equity Share 

Market Lot: 88 Shares 

Minimum Order Quantity: 8 Shares 

Listing At: NSE, BSE 

Tentative timetable in respect of the Offer:

Bid/Offer Opens On: June 21, 2017
Bid/Offer Closes On: June 23, 2017
Finalisation of Basis of Allotment: On or about June 29, 2017
Initiation of refunds: On or about June 30, 2017
Credit of Equity Shares to demat accounts: On or about July 03, 2017
Commencement of trading of the Equity Shares on the Stock Exchanges: On or about July 04, 2017

DRAFT PROSPECTUS

Now, let's analyse this IPO where it is a good option to put your money in or not -


1. Media and Entertainment Industry Growth -

The Indian M&E industry includes television, print, films, radio, music, analytics and interactive platforms (out- of-home), animation and VFX, gaming and digital advertising segments. The size of the Indian M&E industry grew at a CAGR of 12.2% to ₹1,157 billion in 2015 from ₹652 billion in 2010 and increased by 12.8% in 2015 from ₹1,026 billion in 2014. The Indian M&E industry is expected to grow at a CAGR of 14.3% to ₹2,260 billion in 2020 from ₹1,315 billion in 2016. TV segment grew faster than the industry average CAGR of 12.8% over the 2014-2015 period and is expected to continue to grow faster than the industry average CAGR of 14.3% over the 2015-2020 period. (Source: The KPMG-FICCI Report) 

2. Pay TV industry -

In terms of revenue, the TV industry in India has grown at a CAGR of 13.4% from ₹328 billion in 2011 to estimated ₹542 billion in 2015. The TV industry continued its growth in 2015 and increased by 14.2% led by strong growth in advertising of 17.0%, which was stimulated by increased e-commerce spending and renewed spending by other sectors such as auto, telecom, mobile handsets, etc. The total TV subscription revenue grew by 12.8% in 2015 which was slower than expected due to delays in Phase III digitization and further delays in availing the benefits of Phase I and Phase II digitization. The TV industry is expected to grow at a CAGR of 15% to reach ₹1,098 billion in 2020. (Source: The KPMG-FICCI Report) 

3. Digitisation under Cable TV Amendment Act by the Government since 2011 has opened a gate for further growth for this Industry.

4. Purpose of Issue -

i)  Repayment/pre-payment, in full or part, of certain borrowings. This means finance cost will be cut, increasing net profits. Amount proposed to be utilised for this purpose is Rs. 1536.16 millions in Fiscal year 2017 and Rs. 760.52 millions in Year 2018.

ii)  General corporate purposes

5. PE valuations in respect of FY17 EPS - 

At price band of Rs 167-170, the company is bringing the issue at P/E multiple of around 78 on FY17 EPS of Rs 2.19 per share. Whereas Industry PE is around 41. Company's valuation looks expensive at current level; hence an overvalued issue.

6. Revenue and Profits -

Increasing Revenue but Profits have been fluctuating

7. Operations Cash Flows - Positive trend

Though the financials are not looking bad, but considering latest EPS and expected EPS of next FY, the issue still seems to be a bit overpriced, even in comparison with it's peers IPO issues in the past. We recommend to avoid the IPO, wait for the stock to correct for a while and then it can be a good investment opportunity. Also, the market also has it in air that the issue is over-priced, which means it might even lead to opening at lower price than Issue price or maybe just a little up.