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GTPL Hathway IPO: Valuation looks expensive at current level; Avoid -
GTPL Hathway IPO: Valuation looks expensive at current level; Avoid
Hem Securities | Published: 21 Jun, 2017  | Source :

Co is a leading regional MSO in India (Source: MPA Report), offering cable television and broadband services. As of January 31, 2017, co’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, co seeded approximately 6.55 million STBs and had approximately 5.69 million active digital cable subscribers. As of January 31, 2017, Company had 228,217 broadband subscribers (based on the number of broadband subscribers of co’s Subsidiary, GTPL Broadband Private Limited; the broadband business of Company was transferred to GTPL Broadband Private Limited with effect from April 1, 2016). As of January 31, 2017, co provided broadband services. As of January 31, 2017, co offered up to 285 pan-India standard definition channels, 158 regionally-transmitted standard definition channels, 32 panIndia high definition channels and 39 regionally-transmitted high definition channels on its digital cable platform. Co also owned and operated 27 channels offering localized content developed for the states in which co broadcast, including a range of religious and cultural content, film, music and educational channels. Co intends to raise funds for repayment of certain borrowings worth of Rs 240 Cr through fresh issue while it is bringing offer for sale of upto 14,400,000 Equity shares.


Investment Rationale:

Co is 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 (Source: MPA Report).


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 co’s networks and limit its transmission to the spectrum of up to the 700 MHz frequency or require co to adopt technological systems to stop such interference. This may adversely affect co’s business, results of operation and financial condition.


At price band of Rs 167-170 ,co is bringing the issue at p/e multiple of around 78 on FY17 Eps of Rs 2.19/share. Co’s valuation looks expensive at current level. Hence we recommend "Avoid" on issue.


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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.