GTPL Hathway Ltd – IPO Review

GTPL Hathway IPO
GTPL Hathway IPO comprises of Fresh issue of equity shares for Rs. 240 crores as well as offer for sale by existing shareholders with total issue size of Rs. 485 crore. GTPL Hathway  is a regional multi system operator (MSO) offering cable television and broadband services. GTPL Hathway provides digital cable television services in 169 towns across the country and It is the number 1 operator in Gujarat and number 2 MSO in Kolkata and Howrah in West Bengal.  A quick review of GTPL Hathway IPO has been attempted.

GTPL Hathway IPO: Issue Details

Issue Period Wednesday, June 21, 2017 to Friday, June 23, 2017
Price Band Rs.167 – 170
Minimum Bid Lot 88 Equity Shares 
Issue Size  Fresh Issue of Equity shares aggregating upto Rs.240 Crores and
  Offer for sale of 14,400,000 Equity Shares.
Total Issue Size ( Rs.) Rs. 484.8 crores (at upper end of Price Band)
Issue Structure :  
QIB 50% of the Net Offer- Rs. 242 Cr
NIB 15% of the Net Offer Rs.  73 Cr
Retail 35% of the Net Offer  Rs.  170 Cr
Lead Manager JM Financial, BNP Paribas, Motilal Oswal, Yes Securities
Registrar Link Intime India Pvt. Ltd.
About GTPL Hathway

GTPL Hathway is India’s leading cable TV distribution company reaching an estimated 8 million households in over 169 cities across 10 states in India with presence in Maharashtra, Gujarat, Rajasthan, West Bengal, Jharkhand, Bihar, Madhya Pradesh, Andhra Pradesh, Telangana and Assam. GTPL Hathway is the largest MSO in Gujarat with a 67% share of the Cable TV market and is the second largest player in the cable market of Kolkata and Howrah with a 24% market share.

The company was incorporated in 2006 by Aniruddhasinhji Jadeja and Kanaksinh Rana, and had cable service businesses in Ahmedabad and Vadodara. In October 2007, Hathway acquired a 50% share in the company. There after the  company has expanded its  services,and also entered into acquisitions and  joint ventures or by agreements with other smaller regional MSOs, local cable operators (LCOs) as well as independent service operators (ISOs). 

As of January 31, 2017, the company’s digital cable television services reached 189 towns across India, including towns in Gujarat, West Bengal, Maharashtra, Bihar, Assam, Jharkhand, Madhya Pradesh, Telangana, Rajasthan and Andhra Pradesh. As of January 31, 2017, it has seeded approximately 6.55 million set top boxes (STBs) and had approximately 5.69 million active digital cable subscribers.

The company’s primary source of revenues for cable services is subscription income received from subscribers and placement / carriage income received from carriage fees payable by broadcasters for carrying their channels and placement fees payable by broadcasters for placing their channels on a preferred channel number or position. As of January 31, 2017, it offered up to 285 pan-India standard definition channels, 158 regionally-transmitted standard definition channels, 32 pan-India high definition channels and 39 regionally-transmitted high definition channels on its digital cable platform. It also owned and operated 27 channels offering localized content developed for the states in which it broadcast, including a range of religious and cultural content, film, music and educational channels. It also has the right to place the Gujarat News channel on its network, which is produced by group company Gujarat Television Private Limited. It produces its own content and also offers third-party content on its local channels to ensure that it has a suitable mix of content that appeals to a range of demographics.The company has completed roll-out of STBs (set up Boxes) in Phase I, Phase II and Phase III areas and is working towards completing the roll-out of STBs in Phase IV areas. 

Objective of GTPL Hathway IPO:

  1. The public offer comprises the Fresh Issue of shares by the company and an Offer for Sale by the selling shareholders. GTPL Hathway proposes  Company proposes to utilise the proceeds from fresh issue  funds repayment/pre-payment, in full or part, of certain borrowings; and general corporate purposes.


Financials ( Rs.  In Crores)
9m FY17 2016 2015 2014
Net Revenue from Operations 651.93 738.45 617.64 526.65
Revenue Growth (%)   19.56% 17.28%  
EBITDA  172.66 163.32 150.59 106.91
EBITDA Margin (%) 26.48% 22.12% 24.38% 20.30%
Profit Before Tax 26.85 14.56 25.58 -4.29
Net Profit  16.3 4.6 15.49 -8.46
Net Profit  Margin 2.50% 0.62% 2.51% -1.61%
Face Value 10 10 10 10
Share Capital 98.35 98.35 2 2
Reserves 273.41 252.11 279.31 268.39
Net worth 371.76 350.46 281.31 315.9
RoNW (%) 4.38% 1.31% 5.51% -2.68%
NAV Per Equity share (Rs.) 37.8 35.64 34.31 32.97
EPS (Rs.)  Dilued 2.16 0.73 1.51 -0.76
GTPL Hathway IPO: Pros
  • GTPL Hathway is one of the leading regional MSOs (multi system operator)  with significant market share in Gujarat and Kolkata
  • High quality infrastructure network.
  • ARPU (Average Revenue per user)  expected to improve as company intends to increase HD offerings. 
  • Experienced Promoters and management team with proven execution track record backed by Hathway, one of India’s leading MSOs
  • Envisions strong broadband growth with newer GPON technology rollout
    GTPL has ~230000 broadband subscribers with monthly ARPU of | 472
    and average usage of 35 GB per month. The company expects strong
    growth in the broadband segment as it is set to launch GPON, which is
    and can provide broadband speeds of 1 GB/sec. 
GTPL Hathway IPO: Cons
  • Cable television distribution business faces competition from DTH satellite television and IPTV,
  • The business of GTPL Hathway requires significant capital investment primarily for acquiring equipment for operating HFC networks (a combination of optic fiber in the backbone and coaxial cables in the downstream).
  • The cable television distribution industry is highly competitive and often subject to rapid and significant changes in the market place, technology, regulatory and legislative environments
  • The company is heavily dependent on LCOs (Local cable operators) to reach the majority of its cable television subscribers, to collect subscription fees, to increase its  subscriber base and to maintain its  service quality standards
GTPL Hathway IPO: Overall Assessment
  • Before IPO Ortel Communications Ltd, another regional player in this field, went public in March 2015. Ortel performance on the bourses has not been encouraging. Performance of other listed companies in this space is also not encouraging.

  • GTPL Hathway IPO is priced at a P/E of  67 times the annualized EPS of Rs 2.5 (on post PO equity) 9MFY2017  and the P/E on  Post Issue equity  works out to 313.2 x  for financial year ended March 2016.

  • EV/Sales for GTPL Hathway  2.98x at the IPO price of Rs 170. Peers like Den Networks. Siti Network and Ortel Communication trade at EV/Sales at 1.5x, 2.65x and 1.53x, respectively placing GTPL Hathway on slightly upper side..

  • At this stage I do not intend to apply for the IPO.

Standard disclaimer:  I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk. 

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