Microsec Initiating Coverage on Hathway Cable and Datacom Limited with Buy Rating

We rate Hathway Cable and Datacom Limited (Hathway) a 'BUY'. Our rating underpins the company's healthy performance in Phase I and Phase II of digitization, parentage of R Raheja group, the company's strong geographic presence and expansion initiatives, and first mover advantage in the Cable Broadband space. However, depreciating Rs. and competition from Direct-to-Home (DTH) players impedes our optimism a bit.

Investment Case

- With total seeding of over 6.8 Mn Set Top Boxes (STBs) in Phase I and Phase II of digitization, Hathway emerged as a leader in digitization spree. The company deployed 2.5 Mn STBs in Phase I of digitization while it installed 4.3 Mn boxes in Phase II of digitization. Furthermore, it has already collected subscriber forms from over 90% of its clients in Delhi and Mumbai. These factors, coupled with Hathway's large addressable market to be digitized in upcoming phases, are likely to boost its performance, going forward.

- Hathway is a part of R Raheja Group, which apart from Cable TV and Broadband is also present in businesses such as Real Estate, Automotive Batteries, Cement, Retail, Media, and Ceramic Tiles etc. The group's diverse experience and financial muscle, in our view, will remain supportive for the company's growth endeavors.

- With its extensive presence of Cable TV services in more than 140 cities, high-speed Cable Broadband services in 20 cities and addressable subscriber base of over 11 Mn users, Hathway is amongst the largest cable distribution companies of India. In addition, the company is the pioneer in Cable Broadband space. We expect these factors, especially its strong cable broadband presence to help Hathway stay ahead of its competitors.

Source : Equity Bulls

Keywords