S tock TALES - ICICI Directcontent.icicidirect.com/mailimages/IDirect_GTPLHathway_S... · 2019. 9. 27. · GTPL Hathway (GTPL) is a leading MSO offering cable television (CATV) and

Stock Tales are concise, holistic stock reports across wider spectrum of sectors. Updates will not be periodical but based on significant events or change in price.

Stock_____

TALES

September 27, 2019

ICIC

I S

ecurit

ies –

Retail E

quit

y R

esearch

Stock T

ale

s

September 27, 2019

CMP: | 71 Target: | 98 (38%) Target Period: 12-18 months

GTPL Hathway (GTPHAT)

BUY

Attractively valued...

GTPL Hathway (GTPL) is a leading MSO offering cable television (CATV) and

broadband services with a strong presence in Gujarat, West Bengal and

Maharashtra. The company has consistently been the most efficient MSO

with superior profitability. Its revenues and EBITDA over FY16-19E have

grown at a robust 19.2% and 28%, respectively, driven by strong traction

CATV in broadband business. With implementation of New Tariff Order

(NTO) and gradual expansion in broadband, we expect GTPL to clock

revenues, EBITDA (ex-EPC) CAGR of 20.3%, 23.7%, respectively. GTPL is

available at attractive FY20E FCF yield of ~12%, and core earnings (ex-EPC)

multiple of ~6x. We assign a BUY rating with a target price of | 98/share.

NTO implementation aids strong growth in CATV

NTO implementation has resulted in higher end-customer ARPUs and

relatively higher payouts to them. This has boosted MSO’s EBITDA and

profitability. Post NTO implementation, GTPL’s share of ARPU (post tax) on

an average basis has gone up from | 75-76/month to | 125/month (exit rate

in Q1FY20) while EBITDA/sub has nearly doubled to | 32 vs. | 17 earlier.

Consequently, we expect subscription revenue CAGR of ~25.7% in FY19-

21E to | 1159 crore. Overall CATV revenues (subscription, placement and

activation revenues) are expected to witness 20.1% CAGR in FY19-21E to |

1589 crore, largely owing to modest ~10% CAGR in placement revenues

and flattish activation revenues.

Broadband to witness decent growth driven by its key market

GTPL aims to capitalise on its 4.4 million households’ reach in Gujarat to

build a huge broadband customer base (currently at ~340000). We

conservatively bake in addition of 75,000 and 50,000 customers in FY20E &

FY21, respectively, with flattish ARPU of | 420/month with expansion largely

emanating from its key market of Gujarat. Consequently, we expect 21.9%

CAGR over FY19-21E in broadband revenues to | 214 crore.

Valuation & Outlook

GTPL’s consistent superior financial metric vis-à-vis peer is a result of strong

leadership in key markets. We believe that extreme undervaluation more

than prices in the lack of clarity over dynamics between its promoter groups

and impending share supply (in order to meet Sebi’s threshold, RIL is

required to offload ~3.8% of its holding before March 5). Nevertheless,

given NTO benefits, the company is available at extremely attractive FY20E

FCF yield of ~12% and core earnings (ex-EPC) multiple of ~6x on FY20E

basis. We assign a BUY rating and value it at | 98/share, implying

conservative target multiple of 3x FY20E EV/EBITDA (ex EPC) & 8.5x FY20E

core earnings. A key risk to our call remains any discord between the

promoter groups and change in NTO provisions.

Key Financial Summary

s

Source: Company, ICICI Direct Research

(| Crore) FY17 FY18 FY19 FY20E FY21E CAGR (FY19-21E)

Net Sales 907.7 1,091.3 1,245.8 2,216.3 2,253.4 34.5

EBITDA 206.4 295.5 318.2 452.4 486.6 23.7

PAT 40.3 61.1 18.9 152.5 160.5

Adjusted PAT 40.3 65.3 83.7 152.5 160.5 38.4

P/E (x) 17.3 13.1 42.3 5.2 5.0

Price / Book (x) 1.8 1.2 1.2 1.0 0.9

EPS (|) 4.1 5.4 1.7 13.6 14.3

EV/EBITDA (x) 5.9 3.3 3.1 2.1 1.6

RoCE (%) 10.8 14.9 15.8 23.5 22.7

RoE (%) 10.4 9.9 12.6 19.6 18.5

Particulars

Price Performance

Key Highlights

NTO implementation to boost Cable

TV realisations and profitability

Expected to expand its broadband

business gradually in its key market

of Gujarat

Assign BUY rating on the stock with

target price of | 98

Research Analyst

Bhupendra Tiwary, CFA

[email protected]

Particular Amount

Market Capitalization | 798.5 Crore

Total Debt (FY19) | 345.2 Crore

Cash & Liquid Investments(FY19) | 138.8 Crore

EV | 1004.9 Crore

52 week H/L (|) 107/ 53

Equity capital (| crore) 112.5

Face value (|) 10.0

7500

8000

8500

9000

9500

10000

10500

0

50

100

150

200

Jul-17

Jan-18

Jul-18

Jan-19

Jul-19

GTPL NSE500 Index

ICICI Securities | Retail Research 2

ICICI Direct Research

Stock Tales | GTPL Hathway

Company Background

GTPL Hathway (GTPL) is one of the leading multi system operator (MSOs)

in India offering cable television and broadband services. It was

incorporated as Gujarat Tele Link Pvt Ltd at Ahmedabad in 2006 through the

consolidation of cable service businesses in Ahmedabad and Vadodara by

Aniruddhasinhji Jadeja and Kanaksinh Rana. In October 2007, Hathway

Cable and Datacom acquired a 50% equity stake in GTPL, and is one of the

designated promoters of GTPL. The company, therefore, operates under the

name GTPL Hathway Ltd. It was listed on BSE & NSE in 2017. The promoter

group currently holds 78.8% of total equity shares. The majority of the stake

is owned by RIL through Hathway cable & Datacom Ltd (37.3%) and Jio

Content distribution holdings (4.5%), with Aniruddhasinhji Jadeja and

Kanaksinh Rana together holding remaining~37% stake.

Along with its subsidiaries, the company has an active paying customer base

of 7.1 million cable households. With a presence across 500 towns in 10

states through 27000 LCO partners, its major presence is in Gujarat and West

Bengal wherein it commands a market share of 67% (No. 1) and 24% (No.

2), respectively. Other key market include Maharashtra wherein it has ~1.1-

1.2 million active customers.

In the broadband business, GTPL has created 2.66 million home passes.

Currently, the total subscriber base is 340,000, out of which 64,000 are FTTX

subscribers. It has 30000 km owned network of optical fibre.

Exhibit 1: GTPL Hathway presence





Exhibit 2: GTPL segmental snapshot


Cable Broadband

FY19 Revenue

(% of total)

| 1101 crore

(~88%)

| 145 crore

(~12%)

EBITDA Margin 26.8% 15.6%

Presence

Gujarat, WB, Maharashtra,

Rajastahan, Bihar, Jharkhand,

Assam, AP, Telangana, Goa

Largely Gujarat

No. of Subscriber 7.1 million 3,40,000

(of which 64k FTTH customers)

ARPU/Month | 125 (MSO share) | 420

FY19 EBITDA

(% of total)

| 295.6 crore

(~93%)

| 22.6 crore

(~7%)




Investment Rationale

Strong CATV business…

GTPL possesses an enviable cable TV (CATV) business wherein its key

strength lies in the leadership in a few key states as well as its presence

across the Hindi speaking market (HSM). We note that while the company

has a presence in 10 states, the majority (~85%+) of active paying base of

7.1 million is spread across Gujarat (3.1 million), West Bengal (~2 million)

and Maharashtra (1.1-1.2 million). The company is No. 1 player in Gujarat

and enjoys a staggering 67% market share among CATV players.

Furthermore, it is also a No. 2 player with West Bengal having 24% market

share. The presence of ~90% subscriber in HSM allows it to enjoy a strong

carriage/placement fee vis-à-vis other peers.

Exhibit 3: CATV active paying subscribers


NTO implementation –shot in the arm

One the major booster for GTPL has been Trai’s New Tariff Order (NTO)

implementation (key features are given on the right). The NTO, while on the

one hand aimed at empowering customer for channel choice, also

established the distributors (MSO/LCO & DTH) as the key intermediary of

delivering service and allowed them to have a fee in the form of network

capacity fee (NCF) and also a share in channel price as commission while

content cost is largely pass through. In practice, NTO implementation has

resulted in higher end-customer ARPUs and relatively lower retention by

LCOs. This has boosted MSO EBITDA and profitability despite broadcasters

capturing maximum share of the upside from NTO.

Our interaction with the company as well as post NTO financials suggest that

post the NTO implementation, GTPL’s share of ARPU on an average basis

has gone up from | 75-76/month to | 125/month (exit rate in Q1FY20). The

net content cost, however, has inched up to ~| 60 from ~| 26.

Consequently, the net receipt/sub is now at ~| 65 vs. ~| 50, earlier.

Assuming similar other operating costs, the EBITDA/sub, therefore, under

the new regime has nearly doubled to | 32 vs. | 17 earlier. The same is

summarised in exhibit 4 below.

Furthermore, GTPL currently lets LCOs retain >70% compared to 60-65%

allowed by other MSOs. Going ahead, a reduction in this share can also

provide an overall boost to GTPL’s revenues. The company also expects

consolidation in the form of acquisitions of LCOs by MSOs as the former’s

economics with low sub base is not reasonable under the NTO regime.

Key features of NTO

Broadcasters need to bucket channels into

‘Pay channel’ and ‘Free to air’ (FTA). SD and

HD channels cannot be part of same bouquet

Broadcasters to declare maximum retail prices

per month for their channels

Bundled channels (or bouquet) - not to be

allowed to contain any pay channel for which

the maximum retail price per month is more

than | 19

Distributors to charge their subscribers

maximum amount of | 130 per month per STB,

excluding taxes, for 100 SD FTA channels.

Network capacity fee to increase by | 20 for

every 25 additional SD channels

Every broadcaster to declare a minimum 20%

of the MRP of the pay channels or bouquet as

distribution fee and the sum of the distribution

fee and other discounts/incentives offered

cannot exceed 35% of MRP

Carriage fee payable by the broadcaster to the

distributor cannot exceed | 0.20/channel per

month for SD channels and | 0.40/channel per

month for HD channels. Carriage discount

capped at 35%

Interconnection regulations prescribe sharing

of distribution fee and network capacity fee in

the 55:45 ratio between MSO and LCO in case

of no mutual agreement




Exhibit 4: Change in MSO economics due to NTO implementation


Subscription revenues to grow at 25.7% CAGR over FY19-21E

GTPL has largely retained its paying digital customers and its post NTO

subscriber base (as of Q1FY20) was at 7.1 million vs. pre NTO base of 7.45

million (as on Q3FY19). The exit ARPU (GTPL share post tax) in Q1FY20 was

~| 125 while computed ARPU was | 119. Going ahead, we build in 1 million

and 0.5 million addition in paying sub over FY20E and FY21E, respectively.

On the ARPU front, we remain conservative and bake in flattish ARPU (from

current levels) of ~| 120 for both FY20E and FY21E. This would result in

overall CATV subscription revenues CAGR of ~25.7% over FY19-21E to

| 1159 crore.

Overall CATV revenues (subscription, placement and activation revenues)

are expected to witness 20.1% CAGR in FY19-21E to | 1589 crore, largely

owing to modest ~10% CAGR in placement revenues and flattish activation

revenues over the same period.

Exhibit 5: Subscription revenues to grow at 25.7% CAGR over FY19-21E


Exhibit 6: Overall CATV revenues to grow at 20.1% CAGR over FY19-21E


MSO Economics - Per Sub/month basis (|) Pre NTO Post NTO

A. Share of ARPU (post Tax) 76 125

i. Paid to Broadcaster 58 92

ii. Received as Carriage & Placement 32 32

B. Net Content Cost (i- ii) 26 60

Net receipt for MSO (C= A-B) 50 65

less: Other operating Expenses 33 33

EBITDA per sub 17 32




Broadband ramping up gradually

GTPL currently provides broadband services primarily to residential users,

using a combination of optic fibre (GPON Technology) and Ethernet cables

(Metro Ethernet Network [MEN] technology). In the broadband business,

GTPL Hathway has created 2.66 million home passes (of which ~1.4 million

is FTTx home pass). While the company offers broadband in its various

cable markets, majority of the customer base is in Gujarat. It aims to

capitalise on its 4.4 million household’s reach in Gujarat to build a huge

broadband base. It aspires to convert at least ~20% of the home passes. It

has also launched a dual service product viz. GigaHD, which is a broadband

service along with cable services as a single package at attractive rates,

largely aimed at converting current cable customers.

Currently, the total subscriber base is 340,000, out of which 64,000 are FTTX

subscribers. The current ARPU is | 420/month with data usage/customer at

120 GB/month. The company is targeting addition of ~1 lakh customers

(largely FTTx) in FY20. We conservatively bake in addition of 75,000 and

50,000 customers in FY20E and FY21, respectively, with flattish ARPU of

| 420/month. Consequently, we expect 21.9% CAGR in FY19-21E in

broadband revenues to | 214 crore.

In terms of its partnership with Jio, which is now its co-promoter post

acquisition of Hathway Cable and Datacom, it expects a complete

demarcation in terms of area of operation within the next couple of quarters.

Exhibit 7: Broadband business KPI


Exhibit 8: Broadband revenues to grow at 21.9% CAGR over FY19-21E


FY16 FY17 FY18 FY19 FY20E FY21E

Broadband Home passes ("000) 840 1,080 1,300 2,150 3,000 3,000

Broadband subscribers ('000) 170 240 280 315 400 450

FTTx subscribers ('000) NA NA NA 44 114 164

Broadband ARPU / Month (|) 455 480 480 430 420 420




EPC business – opportunity to enhance digital infrastructure

implementation capabilities

GTPL been appointed as the project implementation agency (PIA) of

Package B for implementation of BharatNet Phase - II Project in Gujarat by

the Gujarat Fibre Grid Network Ltd (GFGNL). The project’s objective is to

connect 3,767 Gram Panchayats in 10 districts by implementing end-to-end

optic fibre cable (execution of ~17000 km) and digital infrastructure. The

contract value is | 1,246 crore and is EPC-based involving survey, designing,

planning and executing with active/passive components and commissioning

of complete network. The contract value includes EPC portion (~| 1050

crore), with remaining value being three years operation & maintenance

services. The project OMC portion also has the option to be extended for

the next four years at additional value. Polycab India is the consortium

partner (will take half the profits).

GTPL views the abovementioned project as an opportunity to enhance

digital infrastructure capabilities with increased presence in rural Gujarat.

The company is targeting completion by FY20E end and expects overall

margins of ~7%. We conservatively bake in execution over FY20E and

FY21E in the ratio of 60:40 with margins of ~6.5%. Given the management

commentary, we believe that it is a one-off opportunity that GTPL is

undertaking largely given its wide presence in Gujarat on distribution front.

Exhibit 9: EPC business projections


| crore FY20E FY21E

EPC Revenues 600.0 450.0

EPC Cost 561.0 420.8

% of EPC Revenues 93.5% 93.5%

EPC EBITDA 39.0 29.3

% Margins 6.5% 6.5%




Financials

Revenues expected to grow at 34.5% CAGR to | 2254 crore in FY19-21E

GTPL’s revenues in FY16-19E have grown at a robust 19.2% driven by 18.4%

CAGR in CATV revenues and 25.6% CAGR in broadband revenues over the

same period.

Going ahead, on an overall basis, we expect GTPL’s revenues to grow at

34.5% CAGR to | 2253 crore in FY19-21E. The superior CAGR is owing to

execution of EPC project over FY20 & FY21.

On a core continuing business basis, overall revenues (ex-EPC) are expected

to witness a strong 20.3% CAGR driven by 25.5% CAGR in broadband

revenues and 18.4% CAGR in cable revenues.

Exhibit 10: Revenues expected to clock 34.5% FY19-21 CAGR to | 2253 crore


EBITDA to witness 32% CAGR over FY19-21E

The EBITDA margin profile of the GTPL business is largely favourable for

CATV business wherein it clocked ~27% margins while margins for

broadband were ~15.5% in FY19. Over FY16-19, the company witnessed a

strong 28% CAGR in EBITDA aided by revenues growth traction.

Going ahead, given the execution of low margins EPC project, the reported

margins will be lower than FY19. We expect overall EBITDA CAGR of over

32% in FY19-21 to | 487 crore. The margins, given the EPC revenue booking

are expected at 21.6% in FY21E vs. 25.5% in FY19.

The overall EBITDA (ex-EPC), going ahead, is expected to witness a strong

23.7% CAGR to | 457 crore, driven by robust topline growth, with margins

(ex-EPC) largely flattish at 25.5% in FY21.

Exhibit 11: EBITDA expected to grow at 32% CAGR over FY19-21E to | 487 crore


152 206 295 318 452 487

20.6

22.7

27.125.5

20.421.6

0.0

5.0

10.0

15.0

20.0

25.0

30.0

0

100

200

300

400

500

600

FY16 FY17 FY18 FY19 FY20E FY21E

(%

)

(| crore)

EBITDA Margin (RHS)

Overall revenues (ex-EPC) are expected to witness a

strong 20.3% CAGR driven by 25.5% CAGR in

broadband revenues and 18.4% CAGR in cable

revenues

The overall EBITDA (ex-EPC), going ahead, is

expected to witness a strong 23.7% CAGR to | 457

crore, driven by robust topline growth,




Adjusted PAT expected to grow at 38.4% CAGR to | 161 crore in FY19-21E

The company had provided for one-time impairment of trade receivables

aggregating to | 64.9 crore in its P&L in FY19, owing to changes in pricing

mechanism & arrangements among the company, LCOs and broadcaster on

account of NTO implementation. This led to a sharp decline in reported PAT.

On an adjusted basis, given strong growth in topline and EBITDA, earnings

have grown at stupendous CAGR of 125% in FY16-19.

Going ahead, with robust growth traction in revenues and EBITDA, we

expect adjusted earnings to grow at 38.4% CAGR in FY19-21E to | 161 crore.

Exhibit 12: Adjusted PAT expected to grow 38.4% to | 161 crore


Return ratios, free cash flows to remain strong, going ahead

GTPL clocked RoE (adjusted) & RoCE of 12.6% & 15.8%, respectively, in

FY19, clearly reflecting a healthy business return metric.

With rising revenues and profitability, the return ratios are expected to

witness a sharp expansion. We expect RoE and RoCE to expand to 18.5%

and 22.7%, respectively, in FY21E.

Exhibit 13: Return ratios to remain stable


Strong FCF to boost dividend pay-outs…

Similarly, with strong earnings growth, stable working capital and capex

(| 160 crore & 180 crore for FY20 & FY21, respectively), cash flows are

expected to remain strong. We expect GTPL to turn net debt free in FY21E,

notwithstanding increased working capital requirement for EPC project.

FCF is expected to remain strong at | 99 crore & | 252 crore in FY20E and

FY21E, respectively. With strong FCF and based on management

commentary, we bake in DPS of | 3/share and | 5/share in FY20E and FY21E

implying attractive yield potential of ~4% and 7%, respectively, on CMP.




Key risk & concerns

Trai flip flop on NTO can impact revenues

Recently, Trai issued a consultation paper inviting comments from industry

stakeholders to address multiple issues in the new regime largely regarding

absence of a cap on discounts and significant divergence in pricing between

a la carte and bouquet, higher customer ARPU and problem of plenty owing

a large number of bouquets. While the discount cap was turned down by

high court earlier, Trai’s insistence on re-looking and implementation could

impact overall subscription revenues of broadcasters, which would also

impact DPOs commission. Furthermore, any intervention on interconnect

agreement or change in NCF could also impact revenues.

Share supply & discord (if any) between promoters

Post DEN/Hathway acquisitions by Reliance (RIL) and subsequent open offer

for GTPL (it acquired 4.5% stake), GTPL’s free float has reduced to 21.2%

(below the 25% Sebi threshold). Therefore, to meet Sebi’s threshold, RIL is

required to offload ~3.8% of its holding before March 5, 2020. Therefore,

this supply overhang could keep the stock in a range. Moreover, given that

other promoters’ (Jadeja & Rana) insistence on maintaining ownership, any

discord between RIL (which Jio in similar business) and them could create

interim challenges on operation/growth strategy. We note that the

management expects a complete demarcation in terms of area of operation

of GTPL/Jio within the next couple of quarter, which would mean no

unfavourable impact in future.




Financial Summary

Exhibit 14: Profit & loss statement (| crore)


Exhibit 15: Cash flow statement (| crore)


Exhibit 16: Balance Sheet (| crore)


Exhibit 17: Key ratios


(| Crore) FY18 FY19 FY20E FY21E

Total operating Income 1,091.3 1,245.8 2,216.3 2,253.4

Growth (%) 20.4 14.2 77.9 1.7

Operating Expenses 530.1 602.1 837.6 938.5

EPC Costs 0.0 0.0 561.0 420.8

Employee Expenses 126.1 147.1 163.2 182.1

Other Expenses 139.6 178.4 202.0 225.4

Total Operating Expenditure 795.8 927.6 1,763.8 1,766.8

EBITDA 295.5 318.2 452.4 486.6

Growth (%) 16.8 7.7 42.2 7.5

Depreciation 171.1 201.9 221.6 247.9

Interest 42.5 51.4 43.8 41.0

Other Income 22.1 43.3 25.0 25.0

Exceptional Items 4.2 64.9 - -

PBT 99.8 43.4 212.1 222.8

MI/PAT from associates 2.7 6.0 6.1 6.1

Total Tax 41.4 18.5 53.4 56.1

PAT 55.6 18.9 152.5 160.5

Growth (%) 32.7 -66.1 707.7 5.3

Adjusted PAT 65.3 83.7 152.5 160.5

EPS (|) 5.4 1.7 13.6 14.3

(Year-end March) FY18 FY19 FY20E FY21E

Profit after Tax 61.1 18.9 152.5 160.5

Add: Depreciation 171.1 201.9 221.6 247.9

Add: Interest Paid 42.5 51.4 43.8 41.0

(Inc)/dec in Current Assets -27.7 -73.1 -155.3 -81.5

Inc/(dec) in CL and Provisions 108.9 72.3 40.2 104.7

CF from operating activities 355.9 271.3 302.7 472.6

(Inc)/dec in Investments -3.3 -1.0 0.0 0.0

(Inc)/dec in Fixed Assets -307.0 -201.4 -160.0 -180.0

Others 26.4 -22.0 0.0 0.0

CF from investing activities -283.9 -224.4 -160.0 -180.0

Issue/(Buy back) of Equity 208.8 1.8 0.0 0.0

Inc/(dec) in loan funds -216.5 16.9 -32.6 -20.0

Interest paid -42.5 -51.4 -43.8 -41.0

Dividend outflow -13.5 -13.5 -40.6 -67.7

Others 15.9 6.2 -6.0 -6.0

CF from financing activities -47.8 -40.1 -123.0 -134.7

Net Cash flow 24.2 6.8 19.7 157.9

Opening Cash 107.8 132.0 138.8 158.5

Closing Cash 132.0 138.8 158.5 316.5


Liabilities

Equity Capital 112.5 112.5 112.5 112.5

Reserve and Surplus 545.2 552.3 664.2 757.0

Total Shareholders funds 657.7 664.8 776.7 869.5

Minority Interest 30.3 36.4 30.4 24.4

Total Debt 328.3 345.2 312.5 292.5

Deferred Revenue 176.1 126.7 126.7 126.7

Deferred Tax Liabilities (Net) -58.2 -77.9 -77.9 -77.9

Total L iabilities 1,134.1 1,095.1 1,168.4 1,235.2

Assets

Gross Block 1,788.6 1,988.9 2,148.9 2,328.9

Less: Acc Depreciation 627.3 821.6 1,043.2 1,291.1

Net Block 1,161.3 1,167.3 1,105.7 1,037.8

Capital WIP 38.5 32.0 32.0 32.0

Goodwill on consolidation 48.8 46.7 46.7 46.7

Total Fixed Assets 1,248.6 1,246.0 1,184.4 1,116.5

Investments 13.7 14.7 14.7 14.7

Debtors 326.2 321.3 376.5 401.3

Loans and Advances 48.6 89.9 127.9 156.1

Other Current Assets 53.7 114.5 176.6 205.1

Cash 132.0 138.8 158.5 316.5

Total Current Assets 560.5 664.5 839.6 1,079.0

Creditors 195.9 299.2 327.9 333.4

Provisions 10.1 9.5 10.5 10.6

Other Current Liabilities 482.7 521.3 531.9 631.0

Total Current Liabilities 688.7 830.1 870.2 975.0

Net Current Assets -128.1 -165.6 -30.7 104.0

Application of Funds 1,134.1 1,095.1 1,168.4 1,235.2


Per share data (|)

EPS 5.4 1.7 13.6 14.3

Cash EPS 20.6 19.6 33.3 36.3

BV 58.5 59.1 69.1 77.3

DPS 1.0 1.0 3.0 5.0

Cash Per Share 11.7 12.3 14.1 28.1

Operating Ratios (%)

EBITDA Margin 27.1 25.5 20.4 21.6

PBT / Total Operating income 11.4 9.3 10.4 10.6

PAT Margin 6.0 6.7 6.9 7.1

Inventory days 0.0 7.3 7.3 7.3

Debtor days 109.1 94.1 62.0 65.0

Creditor days 65.5 87.7 54.0 54.0

Return Ratios (%)

RoE 9.9 12.6 19.6 18.5

RoCE 14.9 15.8 23.5 22.7

RoIC 13.5 13.6 25.4 29.1

Valuation Ratios (x)

P/E 13.1 42.3 5.2 5.0

EV / EBITDA 3.3 3.1 2.1 1.6

EV / Net Sales 0.9 0.8 0.4 0.3

Market Cap / Sales 0.7 0.6 0.4 0.4

Price to Book Value 0.0 0.0 0.0 0.0

Solvency Ratios (x)

Debt/EBITDA 1.1 1.1 0.7 0.6

Net Debt / Equity 0.3 0.3 0.2 0.0

Current Ratio 0.6 0.6 0.8 0.8

Quick Ratio 0.6 0.6 0.7 0.7




RATING RATIONALE

ICICI Direct endeavours to provide objective opinions and recommendations. ICICI Direct assigns ratings to its

stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,

Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined

as the analysts' valuation for a stock

Buy: >15%

Hold: -5% to 15%;

Reduce: -15% to -5%;

Sell: <-15%

Pankaj Pandey Head – Research [email protected]

ICICI Direct Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]




ANALYST CERTIFICATION

I/We, Bhupendra Tiwary, CFA, MBA (Finance) Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately

reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or

view(s) in this report. It is also confirmed that above mentioned Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding

twelve months and do not serve as an officer, director or employee of the companies mentioned in the report.

Terms & conditions and other disclosures:

ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI

Securities Limited is a SEBI registered Research Analyst with SEBI Registration Number – INH000000990. ICICI Securities Limited SEBI Registration is INZ000183631 for stock broker. ICICI

Securities is a subsidiary of ICICI Bank which is India’s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance,

general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment

banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons

reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.

Recommendation in reports based on technical and derivative analysis centre on studying charts of a stock's price movement, outstanding positions, trading volume etc as opposed to focusing

on a company's fundamentals and, as such, may not match with the recommendation in fundamental reports. Investors may visit icicidirect.com to view the Fundamental and Technical

Research Reports.

Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein.

ICICI Securities Limited has two independent equity research groups: Institutional Research and Retail Research. This report has been prepared by the Retail Research. The views and opinions

expressed in this document may or may not match or may be contrary with the views, estimates, rating, and target price of the Institutional Research.

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly

confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or

reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no

obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate

that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where

ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances.

This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness

guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe

for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat

recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy

is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own

investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent

judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign

exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily

a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ

materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice.

ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other

assignment in the past twelve months.

ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report

for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or

specific transaction.

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did

not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI

Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report.

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day

of the month preceding the publication of the research report.

Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject

company/companies mentioned in this report.

ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.

We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such

distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such

jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come

are required to inform themselves of and to observe such restriction

Documents

S tock TALES - ICICI Directcontent.icicidirect.com/mailimages/IDirect_GTPLHathway_S... · 2019. 9. 27. · GTPL Hathway (GTPL) is a leading MSO offering cable television (CATV) and