Cable and broadband service provider GTPL Hathway Ltd. made its stock market debut on Tuesday, at its issue price of Rs 170 on the NSE.
The Rs 480 crore initial public offering had been subscribed 1.53 times, but retail participation had remained muted. Qualified institutional buyers (QIBs) and high net worth individual segments were subscribed 1.48 times and 2.85 times respectively.
The offer comprised of a fresh issue worth Rs 240 crore while the remaining Rs 240 crore was an offer for sale of up to 1.44 crore equity shares by existing shareholders. The cable distributor had also raised Rs 145 crore from anchor investors.
The company aims to use the proceeds from its public offer to pare debt and improve its network infrastructure.
Analysts have raised questions over pricing, citing high valuations, but the company's managing director Aniruddhasinh Jadeja justified the price to BloombergQuint saying its strong presence in existing markets like Gujarat will only help it maintain an edge over other players.
The company's current price to book value multiple stands at 3.1 times, compared to its peer average of 1.5 times. The price to book indicator is used to compare a stock's market value to its book value, higher the value, the more overvalued the stock is considered to be.
Ahmedabad-based GTPL Hathway is a regional multiple system operator (MSO) offering cable television and broadband services. It is the largest MSO in Gujarat, with a 67 percent market share of the cable TV market. It is also the second largest player in Kolkata and Howrah with a 24 percent market share.
Revenue has grown at a compounded annual growth rate of 24 percent while earnings before interest, tax, depreciation and amortisation rose 40 percent, he had added.
Bullish On Revenue Growth
Average revenue per set top box is expected to rise from current levels of Rs 110 per unit, said the company's managing director Anirudhsinh Jadeja, in an interview to BloombergQuint. The digital service provider hopes to make the most of the third and fourth phase of digitisation which will cover the entire country to increase its presence.
The company is also going to use more than 90 percent of the IPO proceeds to cut its debt by more than half, bringing it down to Rs 190 crore. Further expansion will be done only through a mix of debt and internal accruals, said Jadeja.
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