GTPL Hathway has tepid listing

GTPL Hathway is the new entrant on the stock exchanges today. The stock got listed on the BSE at Rs.170, the same as its IPO price, going down to Rs.162 levels.

The IPO was met with a very tepid response as it was subscribed just 1.53 times. QIB portion was subscribed just 1.48 times and non-institutional investors subscribed 2.85 times.

Our verdict on the IPO in our IPO Analysis section, “Regulatory uncertainties loom large over the sector as TRAI’s new tariff regime, which will come into effect from Sept 2017, will (i) restrict subscription charges for free-to-air channels, (ii) fix charges for pay channels, as also (iii) cap distributor fees, among others, which will adversely affect cable TV industry and hence the company. Going forward, its subscription income and ARPUs may come under stress. Also, carriage fees, the second highest income stream after subscription charges, have been capped wef 3rd Mar 2017. Thus, it is important to factor in these headwinds before taking a call on the company and its valuation. To summarise, weak fundamentals (huge depreciation, slim net margins, single digit RoE, high debtors), sector headwinds and inexpensive pricing make this IPO unattractive and hence an avoid.”