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GTPL Hathway shares open slightly lower on stock market debut

LiveMint logoLiveMint 04-07-2017 Nasrin Sultana

Mumbai: Regional multi system operator (MSO) GTPL Hathway Ltd on Tuesday opened marginally lower on debut but soon pared its losses and gained over 1% after its initial public offering (IPO) was subscribed 1.53 times last week.

The stock opened at Rs170 a share and touched a high and a low of Rs174.40 and Rs162.25 respectively. At 10.05am, the scrip was trading at Rs171.75 on BSE, up 1% from its issue price of Rs170 a share. The issue was open between 21-23 June.

The company aimed to raise Rs240 crore through a fresh issue of shares and a secondary share sale comprising 14.4 million shares by the promoter group.

It had raised Rs145.43 crore by allotting shares to anchor investors. Proceeds from the fresh issue will be used for repayment and pre-payment of debt which stands at Rs229 crore.

GTPL Hathway is market leader in Gujarat with a market share of 67% of cable television subscribers in 2015.

“Gujarat is an important market for broadcasters and advertisers with 5% viewership share from the market on an all-India basis and more than 8% of the Hindi speaking market in India in 2015. Hence, the company accounted for 14% share of the total cable carriage and placement fee market in India in FY16,” ICICI Securities Ltd said in a 16 June report.

The company has 2,30,000 broadband subscribers with monthly average revenue per user (ARPU) at Rs472 and average usage of 35 GB per month.

Over FY14-16, GTPL’s revenue registered a compound annual growth rate (CAGR ) of 18% and Ebitda CAGR of 22% largely supported by reduction in cost of raw materials.

“However, adjusted net profit for the company looks patchy on account of high interest cost and depreciation due to capital intensive nature of the business. Return profile for the company is weak,” said Centrum Broking Ltd in a 20 June report.

GTPL earns majority of its revenues via subscription, activation and placement revenues.

As of FY16, subscription revenues contribute as much as 40% to overall revenues and have grown at 32% CAGR over FY13-16.

“Being a regional leader, the company enjoys several content costs advantage with broadcasters. Hence, it operates at a better margin profile against its peers. Going ahead, as the high ARPU generating broadband segment gains momentum, margins are expected to improve further. In addition, monetisation of Phases II/III will be further EBITDA accretive,” ICICI Securities added.

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