Global research and brokerage firm UBS is bullish on the shares of Hathway Cable and Datacom Ltd after the company posted a net profit of Rs 14 crore in the quarter ended September 30th 2017, as against a net loss of Rs 40 crore in the previous quarter. Hathway Cable and Datacom standalone revenue for the quarter came in at Rs. 131 crore, registering a 59.2% yoy decline. EBITDA for the quarter fell by 1.5% yoy to Rs. 52.6 crore with a corresponding margin expansion of 2352 bps. EBITDA margin for the quarter stood at 40.1%. Notably, the margin expansion was primarily aided by absence of pay channel cost during the quarter as against Rs 103.4 cost in corresponding quarter in the last fiscal.
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UBS has a target price of Rs 50 on the shares. Hathway Cable and Datacom Ltd shares surged by more than 19% and were trading at Rs 38.15 this morning. UBS’ target price implies an upside of more than 31% from the current market prices. Notably, the shares have yielded negative returns in the year so far, even as the BSE Smallcap index is up by more than 47% in the year so far. UBS says that a pick-up in subscriber addition will be a key factor to revenue growth.
In April this year, the cable television and broadband internet service provider said that it will spend nearly ₹500 crore in the next three years to offer high-speed broadband and wired Internet. According to Rajan Gupta, Managing Director, Hathway Cable, the company is targeting a customer base of 5 lakhs. “Consumption of content like Netflix, Amazon Play, HOOQ and Voot, and with e-commerce and communication moving online, the need for high-speed and unlimited data download has created a huge demand for wireline fibre broadband,” Rajan Gupta he said back then.