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Wednesday, June 27, 2012

Hathway Cable & Datacom Ltd:Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

Scripscan:Hathway Cable & Datacom Ltd

Story:A crucial thing that would work in favour of Hathway Cable & Datacom is the imminent deadline for digitisation of the whole cable industry. For metros, the deadline ends on June 30. And the whole country is scheduled be digitised by 2014 in a phased manner.Hathway has a presence in 140 cities, while its peer Den Networks is present in 88 cities. Hathway has a deeper and wider presence than Den. This provides the company an edge in converting more subscribers than Den.It is estimated that the phase-II and III have more subscribers than phase-I. Hence, having wide presence in cities covered in phase-II and III than most of its peers works for Hathway.In FY12, the company has installed 6.6 lakh set-top boxes (STBs). At present, it has an inventory of 6 lakh boxes and has geared up to meet STB demand for phase-I of digitisation. The company has planned capital expenditure of Rs 750 crore, which is quite manageable due to its low debt to equity ratio of 0.3.Going ahead, it is expected to reap the benefits from its consistent investment in the business. This is reflected in high depreciation of the company. In FY12, depreciation as a percentage of its net sales was 21% while for Den Networks it was 7%, indicating the extent to which the company has invested in seeding the STBs.For FY12, the company's net loss increased to Rs 50 crore from Rs 39 crore in FY11 . But its operating profit grew by 12% to Rs 82 crore, and net sales increased by around 9% to Rs 508 crore. With rapid digitisation, the company is expected to become profitable due to its strong presence in cities beyond the metros.For FY12, Hathway Cable & Datacom reported an operating profit margin of 16.2% as against 15.7% in FY11. This is far better than its peer Den Networks, which reported an operating profit margin of 11%. Investors are advised to accumulate the company's stock at the current market price of Rs 170 for a horizon of 2-3 years.Expect CAGR gains of 20% in that period.

 1st june 2013 update:For next 9 – 12 months it has negotiated with majority of broadcasters for fixed fee

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