GTPL Hathway’s IPO will be open for subscription from June 21-23. The issue will raise up to Rs 485 crore, comprising a mix of ₹240 crore via fresh issue of shares and the remaining through an offer-for-sale (OFS) of up to 1.44 crore shares in a price band of Rs 167-170 per share with a lot size of 88 and in multiples thereof. The retail allocation will be 35% and the proceeds from the IPO will be utilised towards repayment of loans and other general corporate purposes.
The OFS will be led by Hathway Cable and Datacom Limited which plans to sell 7.2 million shares, 5.48 million shares will be offered by Gujarat Digi Com Private Limited while Managing Director Aniruddhasinhji Jadeja plans to sell 1.13 million shares. Company promoter Kanaksinh Rana will sell 440,000 shares while Amit Shah will offload 144,000 shares. The book-running lead managers to the offer are JM Financial Institutional Securities, BNP Paribas, Motilal Oswal Investment Advisors and YES Securities.
GTPL Hathway is India’s leading Multi System Operator (MSO) cable TV distribution and broadband services company reaching an estimated eight million households in over 169 cities across 10 states. It is the leading MSO in Gujarat and had 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. It is also the second largest player in Kolkata and Howrah in West Bengal and has a market share of 24%. The company provides cable television signals in both digital and analog modes of re-transmission either directly or through affiliated Local Cable Operators (LCOs). It also counts 228,217 broadband subscribers among its customers which are primarily based in Gujarat.
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The company has been performing well on the revenue growth front and has seen its top line increasing from Rs 528.8 crore in FY2014 to Rs 746.2 crore in the year ended 31 March 2016. Notwithstanding the top line growth, GTPL Hathway’s profitability has been volatile and it even posted losses in FY2014 on a consolidated basis. After recovering in the subsequent year, its profits dived again in FY2016.
In terms of valuations, the IPO price band of INR167 – 170 per share values the company at the price/earnings (P/E) ratio of 20.6 – 21.0. It has a decent Return on Net Worth (RONW) of 14.87% on a consolidated basis. To be fair to GTPL Hathway, it has the distinction of being one of the few profitable plays in the industry. However, with so many concerns, investment decision in GTPL IPO is hardly a matter of valuations.