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Y‐T‐D the stock is down 51% as investors fear that delay in cable
digitisation bill and loss of market share to ’DTH’ service providers is
slowing growth for HATH. After the recent fall HATH is an attractive
BUY because 1) I&B and Telecom ministry have confirmed that the
bill would be passed in parliament by Dec, 2) HATH has continued
voluntary digitization in Q1 and added 90K pay TV subscribers and
3) HATH is trading at an EV/EBIDTA of 8x which is less than half of
peer Dish TV. Our TP of Rs150 on HATH is based on discounted CF.
Subsidized pricing supports subs addition in cable, broadband
Untill the digitization bill forces conversion of analog cable homes
into digital, HATH would add subs thru voluntary digitization. For
FY12, we expect 26% increase in pay TV subs to 2.4m (Subs at Q1 end
is 1.9m) HATH’s new broadband services have got good response due
to its offer of 12GB downloads at a price of Rs1500.
Cost savings, increased placement fee to support FY12F GM of 27%
We forecast FY12F GM to rise 250 bp. This is driven by new channels
which is helping increasing placement fee (+25%) and savings in
admin cost (Rs20m in FY12). HATH repaid high cost debt which would
cut interest cost by Rs120m for FY12.
Net cash of Rs1.1bn to support digitization of 1.5m subs in 2 yrs
HATH spends Rs700/subscriber for distributing set top boxes to carry
out voluntary digitisation. Its subs acquisition cost of Rs750 is lower
than Rs1500 for DTH.
Approval for mandatory cable digitization would be a trigger
HATH’s underlying fundamentals remain strong despite the delay in
legislation. We like HATH because it has lesser subs acquisition cost
compared to DTH and a better B/S. We expect the gap between
HATH’s valuation of Rs1.5k/sub vs Rs8k/sub of Dish TV to narrow.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Y‐T‐D the stock is down 51% as investors fear that delay in cable
digitisation bill and loss of market share to ’DTH’ service providers is
slowing growth for HATH. After the recent fall HATH is an attractive
BUY because 1) I&B and Telecom ministry have confirmed that the
bill would be passed in parliament by Dec, 2) HATH has continued
voluntary digitization in Q1 and added 90K pay TV subscribers and
3) HATH is trading at an EV/EBIDTA of 8x which is less than half of
peer Dish TV. Our TP of Rs150 on HATH is based on discounted CF.
Subsidized pricing supports subs addition in cable, broadband
Untill the digitization bill forces conversion of analog cable homes
into digital, HATH would add subs thru voluntary digitization. For
FY12, we expect 26% increase in pay TV subs to 2.4m (Subs at Q1 end
is 1.9m) HATH’s new broadband services have got good response due
to its offer of 12GB downloads at a price of Rs1500.
Cost savings, increased placement fee to support FY12F GM of 27%
We forecast FY12F GM to rise 250 bp. This is driven by new channels
which is helping increasing placement fee (+25%) and savings in
admin cost (Rs20m in FY12). HATH repaid high cost debt which would
cut interest cost by Rs120m for FY12.
Net cash of Rs1.1bn to support digitization of 1.5m subs in 2 yrs
HATH spends Rs700/subscriber for distributing set top boxes to carry
out voluntary digitisation. Its subs acquisition cost of Rs750 is lower
than Rs1500 for DTH.
Approval for mandatory cable digitization would be a trigger
HATH’s underlying fundamentals remain strong despite the delay in
legislation. We like HATH because it has lesser subs acquisition cost
compared to DTH and a better B/S. We expect the gap between
HATH’s valuation of Rs1.5k/sub vs Rs8k/sub of Dish TV to narrow.
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