Hathway Cable & Datacom - Brokerage Views

[sunil]

Hathway Cable & Datacom Limited (HCDL) is a leading cable TV services provider offering analog and digital cable TV services across 125 cities & towns and high speed cable broadband services across 18 cities in India.

Issue opens: Feb 09 ,2010
Issue closes: Feb 11,2010
Price band: Rs 240 - Rs 265
Issue size : Rs 666 -735 cr

Stay tuned we will post reviews from brokerages as they are made available on whether INVESTORS should subscribe or AVOID. Our first take is one can easily AVOID the issue, but lets wait for more views.

[sunil]

Sushil Finance has a "B" Grade rating which indicates - Non Investment Grade  [AVOID in simple terms] on the public issue of Hadthway Dadacom.

[chetan]

SMC Analyst Shilpi Agarwal has the following view on IPO of Hathway,

Looking at the post issue valuation, the stock trades at a P/BV of Rs.3.47 on the lower side of the band and Rs.3.83 on the higher side of the band of its post issue book value of Rs.69.19.At EV/EBITDA level also, it values at Rs.25 and Rs.27.23 pre-issue and Rs.28.45 and Rs.31.10 post issue of the lower and higher side of band respectively.

India's low Internet penetration rate, offers a significant growth potential over time to its cost efficient broadband business segment. However high competitition is likely to be faced by the company particularly from DTH operators with strong roots poses a bit of concern to the company's financial.

[sunil]

HSBC analyst Neeraj Vinayak has asked investors to AVOID the Public Issue of Hathway Cable and Datacom Limited Here is what he had to say,

The company is in an investment mode and needs to continue to subsidise the set-top box prices to increase its number of subscribers and start generating a monthly rent from them. This subsidy would be a drag on the company and the chances of a breakeven looks bleak over short- to medium-term. Since it is a loss making company, we have looked at its EV/EBITDA which works out to be over 23 times on an annualized basis assuming that it will make EBITDA of Rs 1.8 bn for FY10 and considering the market cap at the top end of price band. We believe the issue is expensive and there is no immediate driver which could make the issue attractive on improved valuations in the near term. Hence, we recommend an Avoid on the issue.