Buy Hathway Cable and Datacom; target of Rs 43: Edelweiss

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26 Aug, 2025 12:21

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Edelweiss' research report on Hathway Cable and Datacom

While activation revenue grew 7.0%, carriage revenue improved 5.0% in Q2FY18. Hathway has concluded all content deals with broadcasters and reported 2% QoQ content cost increase in Q2FY18. EBITDA margin jumped 200bps QoQ in cable business aided by monetisation in Phase II (net realisation up INR 3 QoQ to INR 98) and Phase III (net realisation up INR3 QoQ to INR 58) areas. The company expects Phase IV ARPUs to improve to INR 60 from current INR 41.

Outlook

Among MSOs, Hathway is well placed to capitalise on the digitisation opportunity. Hathway Connect will help Phase I & II ARPU growth. Monetising Phase III areas is a key monitorable. We maintain ‘BUY/SP’ with 11x FY19E EV/EBITDA target multiple for consolidated business (ex-GTPL), while GTPL is valued at market cap (20% holding discount). Our TP is INR 43 (INR 37 earlier). At CMP, stock trades at 16.6x FY18E and 11.2x FY19E EV/EBITDA.

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