We present to you the
views of various Analysts on Ortel Communications IPOICICI Research Analyst Karan Mittal & Sneha Agarwal has the following recommendation
At the upper price band of | 200, the company is available at FY14 EV/EBITDA of 20x. The valuations look very expensive in comon to peers. Secondly, scalability looks a concern, given lack of LCO support. Lastly, relatively smaller size (0.5 million subscribers against ~12 million each of national players like Den and Hathway) may limit competitive positioning. We recommend AVOID to this issue.
Emkay Global has the following Review,
The company has recorded Revenue/EBITDA at CAGR of 15%/20% over FY10-14. The management attributed muted revenue growth in last 2 years has been due to funding constraints.
We have been negative on the cable TV distribution industry from 2 years primarily due to 1) inability of MSO to implement package-wise billing, 2) LCO continues to retain majority of the ground collections and 3) continued pressure from broadcasters for higher programming cost. The positive in the case of Ortel are 1) majority of subscribers are owned and minimal LCO intervention results in minimal revenue leakage, 2) investment in cable network will reap benefits in long term, unlike other MSO who are investing in network currently. However, given the subscriber base, we believe company might face pressure from broadcasters for lower carriage revenue and higher programing cost in digitized scenario.
Focus on last mile connectivity is the key positive for the company, which seems to be largely priced-in. Ortel is valued at 12.1x/13.3x lower/upper price band on annualized FY15 EV/EBITDA. We see limited gains from the listing price.
