Issue Price: Rs.240

Listing Strategy: Exit

The tepid response to the issue by the investors on account of its aggressive pricing influenced the fixing of the issue price at the lower end of the IPO price band. The anchor investors who had subscribed prior to the issue opening too bought the shares at the same price.

Despite being the market leader in the cable network business that earns the company more than two-third of its revenues, the company is yet to turn profitable. The accumulated losses to the extent of Rs 4,274 million as on September 30, 2009 would depress future earnings. Negative return on net-worth and high interest costs, further raise the risk and stakes for this company in terms of a successful and timely roll out  of its plans for which IPO money has been earmarked.

We thus reiterate that prudent investors would do well to bide their time till the stock price stands trimmed and the digital roll-out plan of the company gathers momentum. Those who had applied can consider booking out as players with alternative delivery platforms appear more reasonably priced at the moment.

Background Note:

A Cable operator and Internet Service Provider (ISP), Hathway Cable & Datacom was established in 1995 by the Rajan Raheja Group. It  provides analog and digital cable television services across 125 cities and towns and high-speed cable broadband services across 18 cities. As of November 30, 2009, the company had a total of 16,06,883 paying subscribers (cable) and 3,22,135 broadband service subscribers. In addition, the company generates revenues from advertisements aired for and behalf of channels owned by third parties such as Hindi movie channel, Cine Channel and music channel, iTV.

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