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Robust performance…

GTPL Hathway (GTPL) reported a robust operating performance in Q4FY21. Revenues at | 748.7 crore were down 14.2% YoY. However, ex-EPC, revenues were at | 560.1 crore, up 18.2% YoY, led by growth broadband and placement income. Subscription and broadband revenues were at | 266.5 crore and | 81.7 crore, respectively. Reported EBITDA increased 2.4% YoY to | 116.4 crore. EBITDA margins at 15.5% were down 180 bps YoY post increase in operating expenses. Core EBITDA was up 1.5% YoY to | 102.5 crore with margins at 18.3%, down 300 bps YoY. Subsequently, PAT was at | 56.9 crore against net loss of | 13.6 crore in Q4FY20

Cable TV business stable; new market penetration key

Subscription revenues was flat YoY. Placement/carriage income jumped ~35% YoY at | 179.7 crore, driving growth in the CATV business. On the subscription front, ARPU generated was at | 122, marginally lower QoQ. Active subscribers (8 million) and paying subscribers (7.5 million) registered growth of 100K and 150K, respectively, compared to growth of 50K in Q3FY21. GTPL added 0.5 mn residential customers in FY21 and lost nearly same number of commercial customers due to the pandemic. The company maintained target of 50% growth in cable TV subscribers over the next three years on the back of expansion in newer markets and also through inorganic route. We build in ~6% subscription revenues CAGR in FY21-23E. The company will take a call on increase in pricing once normalcy returns.

Broadband segment grows again

Broadband segment reported stupendous growth of 77.2% YoY to | 81.7 crore, driven by strong addition of 45K subscribers during the quarter and ARPU growth (up 5.5% YoY at | 445). GTPL added 230K subscribers during FY21 leading to total | 635K subscribers. The company incurred capex of | 175 crore in FY21 in the broadband segment and guided for | 225-230 crore capex in FY22E. GTPL’s hybrid STBs are expected to be launched in Q1FY22E. We estimate healthy broadband revenue growth of 29% CAGR in FY21-23E, on a higher base

Valuation & Outlook

GTPL’s strong operating performance has been a result of remarkable growth in the broadband segment. We remain constructive on the company given the superior financial metrics with leadership in its key markets. The company has achieved net debt free status in FY21 and has declared dividend of | 4/share in FY21. We revise our estimates slightly downwards post reduced activation income and management commentary on margins. We believe a strengthened balance sheet warrants higher valuations and raise our target multiple. We maintain BUY rating with a revised target price of | 165/share (previous TP: | 175) at 10x FY23E EPS.

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