Edelweiss's research report on Hathway CableWe recently met Mr. Vineet Garg, the newly appointed CFO of Hathway, to understand the progress in prepaid billing and packaging. In line with its long-term strategy, Hathway has already started prepaid billing for its 0.3mn primary subscribers. Further, the company is testing packaging in Bangalore area for its secondary subscribers and will soon roll it out in Phase I and II markets. Hathway remains positive on digitisation of Phase III subscribers (digitised 0.9mn in Q3FY16). Net realisation in Phase III areas is set to increase from INR15 by Q2FY17. STB subsidy in Phase III market is lower (~INR200) compared to INR800 in Phase I and II markets. We continue to be bullish on Hathway’s strategy of introducing packaging in Phase I and II markets along with increased monetisation in Phase III areas. However, the stay order on Phase III areas, likely increase in content cost (7-10% per year) and on-the-ground execution will be key monitorables. Maintain ‘BUY’.Hathway is the best placed MSO to capitalise on the digitisation opportunity. Currently, the company’s digital subscriber base stands at 9.6mn. Also, we like the company’s strategy of increasing investment in the high-margin broadband business, which has started to yield returns. We maintain ’BUY/SP’ with a TP of INR49. At CMP, the stock is trading at 10.7x and 10.1x FY17E and FY18E EV/EBITDA, respectively. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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