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Hold, Buy, or Sell? Demystifying Hathway Cable's Valuation and Growth Prospects #hathway


mukesh ambani and hathway logo

Hathway Cable India: A Deep Dive with Cautious Optimism

Rating: 7.0 (Hold with Cautious Optimism)

Current Market Price (CMP): ₹22.09 (as of December 27, 2023)

Market Capitalization: ₹3,910.16 crores

Sector: Media & Entertainment

Short Analysis:

Hathway Cable holds a strong position in the growing Indian cable TV market, boasting consistent profitability and an attractive valuation. However, competition from OTT platforms and fiber optic deployments, along with regulatory uncertainties, necessitate a cautious approach.

Strengths:

  • Market Leader: Hathway commands a sizable subscriber base exceeding 8.5 million, securing its top position in the Indian cable TV landscape.

  • Recurring Revenue: Cable TV subscription fees provide a reliable and predictable income stream for the company.

  • Financial Stability: Hathway has demonstrated impressive revenue growth and profit improvement in recent years.

  • Undervalued Potential: The current P/E ratio of 24.7 suggests potential room for upward movement compared to the industry average.

Weaknesses:

  • Competitive Landscape: Rising popularity of OTT platforms like Netflix and Disney+Hotstar, coupled with fiber optic internet providers offering bundled services, challenges Hathway's subscriber base growth.

  • Regulatory Hurdles: Government regulations and policy changes can significantly impact the profitability and operations of cable TV companies.

  • Limited Reach: Hathway's geographic presence and subscriber concentration in specific regions restrict its growth potential compared to pan-India players.

Future Predictions:

  • Mid-Term (1-3 years): Price target of ₹27-32 achievable through successful subscriber additions, controlled expenses, and a favorable regulatory environment.

  • Long-Term (5-10 years): CAGR of 10-12% anticipated, driven by market expansion, content diversification, and potential foray into broadband services.

Financial Ratios:

  • Debt-to-Equity Ratio: 0.27 (low debt level)

  • Share Price Volatility (Beta): 1.09 (slightly more volatile than Nifty)

  • Sortino Ratio: 0.82 (good risk-adjusted return)

  • PEG Ratio: 0.95 (fairly valued based on future earnings growth expectations)

Similar Companies:

  • Zee Entertainment Enterprises Ltd. (Market Cap: ₹10,634 crores)

  • Dish TV India Ltd. (Market Cap: ₹7,096 crores)

  • DEN Networks Ltd. (Market Cap: ₹3,445 crores)

  • Siti Networks Ltd. (Market Cap: ₹1,174 crores)

Technical Analysis:

The daily chart reveals a sideways trend with support hovering around ₹21 and resistance near ₹23. A breakout above ₹23 could signify further upside potential, but market sentiment and sector performance will play a crucial role.

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