Hold GTPL Hathway Ltd For Target Rs.275 - ICICI Direct
Recent run-up leaves limited room for upsides…
About the stock: GTPL Hathway (GTPL) is a leading MSO (No. 2 in terms of subscribers) offering cable television (CATV) and broadband services with a strong presence in Gujarat (No. 1), West Bengal (No. 2) and 13 other states.
* Expansion into new states and digitisation has led to strong topline and earnings growth of ~27% and ~86% CAGR, respectively over FY16-21
Q2FY22 Results: GTPL reported mixed Q2FY22 results.
* Core (Ex-EPC) revenue grew 18.6% YoY to | 589.8 crore, driven by sharp jump of ~50% YoY in broadband revenues to | 100.6 crore owing to addition of 45,000 subscribers and 36% YoY growth in cable placement/carriage revenues at | 180 crore
* EBITDA was at | 135.5 crore with margins at 22.7%, flattish YoY
* Reported PAT was at | 47.5 crore, down 4.5% YoY, owing to writeback of insurance claim of | 12.4 crore
What should investors do?
GTPL’s share price has grown by ~58% over the past five years (from ~| 179 in October 2016 to ~| 282 levels in October 2021).
* Given the sharp run up (up 108% in last six months), we maintain HOLD
Target Price and Valuation: We value GTPL at | 275 i.e. 15x FY23E P/E
Key triggers for future price performance:
* The pace of broadband segment expansion both in terms of existing markets and new market entry
* Change in pricing share between LCOs and GTPL, currently lower than peer
* Implementation and impact of NTO 2, which will have an impact on the overall channel pricing for broadcasters and, thus, their strategy ahead will impact distribution/placement for GTPL
Alternate Stock Idea: Besides GTPL, within telecom & media coverage we like Tata Communication
* Cash flow generation consistency and growth levers like cloud, edge & security, IOT
* BUY with a target price of | 1725
To Read Complete Report & Disclaimer Click Here
https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
Above views are of the author and not of the website kindly read disclaimer
