Analysts are not impressed with the prospects of GTPL Hathway which launched its IPO yesterday. As a result, most brokerage houses have maintained negative tone in GTPL Hathway IPO rating citing issues such as aggressive pricing and uncertain outlook of the industry. We also highlighted some of these issues in our analysis of GTPL Hathway IPO. Here are quick clippings of analyst recommendations about the IPO:
Angel Broking has placed a Neutral call on the IPO. “In terms of valuation, GTPL’s P/BV multiple annualized 9MFY2017 at 3.1x, as compared to peers i.e. Den Networks 1.8x, Hathway Cable & Datacom 0.7x, Ortel Comm. 1.4x, Siti Networks 4.8x. The cable industry is already undergoing a period of weak performance and with disruptive pricing of new entrants, there is a high probability that the performance may weaken further. Hence, we recommend NEUTRAL rating on the issue,” said its research note.
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However, Choice Broking has strongly recommended investors to avoid the IPO. “Based on FY16 EPS, we feel that the demand high valuation is not justified. Based on our quick estimate for FY18, we estimate a FY18 earnings of Rs. 3.5 per share and book value per share of Rs. 62.4, which translates into a FY18 forward P/BVPS multiple of 2.7x, which is in-line to the peer average, thereby having little room for appreciation. Thus we recommend an “AVOID” rating for the public issue,” added the research note authored by Rajnath Yadav.
Hem Securities has also put GTPL Hathway IPO rating into negative zone, citing negative impact of TRAI’s potential auction of all available spectrum of frequencies in the wireless 700 MHz band for use in the telecommunication sector. “At price band of Rs 167-170 ,co is bringing the issue at p/e multiple of around 78 on FY17 Eps of Rs 2.19/share . Co’s valuation looks expensive at current level. Hence we recommend “Avoid” on issue,” opined analysts at the brokerage house.
Centrum has further added to negative GTPL Hathway IPO rating and has suggested investors to stay away from the offer. “It also faces risk from other distribution channels of digital broadcasting like over the top (OTT—eg. Netflix) and direct to home (DTH). This has led to broadcasting firms reporting losses in the past. Given GTPL’s weak fundamental performance, competitive intensity and high valuation, we recommend investors to avoid the IPO,” Centrum Broking said in a note,” noted its IPO note.
