| GTPL Hathway Limited | ||||||
| Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to annexure for Details of Instruments & Bank Facilities |
| Detailed Rationale |
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CRISIL has reaffirmed its 'CRISIL A-/Stable/CRISIL A2+' ratings on the bank facilities of GTPL Hathway Limited (GTPL; part of the GTPL group). |
| Analytical Approach |
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CRISIL has combined the business and financial risk profiles of GTPL and its subsidiaries and joint ventures (JVs). The entities, collectively referred to as the GTPL group, operate in similar businesses and have operational and financial linkages. |
| Key Rating Drivers & Detailed Description |
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Strengths * Established market position in the cable TV industry The GTPL group was one of the earlier players in the cable television business, and its promoters have industry experience of two decades. The group adopted an inorganic growth model to increase its regional presence, and has either formed JVs with local cable operators (LCOs) or acquired stake in other big multiple-system operators (MSOs). Over the years, it has expanded its reach to over 80 lakh subscribers in states such as Gujarat, West Bengal and Maharashtra. A market share of 67% in Gujarat supports revenue growth and profitability. * Above-average financial risk profile As expected, tangible networth is a robust Rs 525 crore, following the initial public offer (IPO), leading to a gearing of 0.6 time and moderation in total outside liabilities to tangible networth ratio to 2.2 times as on March 31, 2018. Debt protection metrics are comfortable, supported by healthy margins. Interest coverage ratio was 7.8 times for fiscal 2018 and net cash accrual to total debt ratio was 0.76 time. Weaknesses * Large working capital requirement on account of stretched receivables Gross current assets (GCAs) were more than six months as on March 31, 2018, driven by receivables of around 110 days. Contrary to earlier expectation, the working capital cycle has only marginally improved despite implementation of Digital Addressable Systems (DAS). The GTPL group faces risk inherent in its business model because of its high dependence on LCOs, which delay payments, constraining cash flow. Improvement in receivables cycle remains critical. * Continuous debt-funded capex for STB and broadband business The group has undertaken continuous capex for purchase of STBs and expansion of broadband business, and has invested in JVs/associates for increasing market share. In the three fiscals through 2018, the group undertook capex of more than Rs 900 crore. In the near to medium term, the company is likely to incur annual capex of around Rs 150 crore. Large capex and working capital requirement will continue to constrain liquidity. * Exposure to increasing competition from DTH players The GTPL group faces tough competition from DTH players which have better service and picture quality in comparison to cable network. It has maintained operating margin over 25% because of continuous growth in active subscriber base and increase in activation income. In the medium term, activation income will decline as DAS IV is already completed and there will be activation only for those who are still using analogue signals or shifting from DTH to cable. The group's dependence on LCOs and MSOs does not allow it to provide required services to customers, and leads to delay in realisation of revenue. Average revenue per user remains low compared with DTH operators like Tata Sky Ltd. |
| Outlook: Stable |
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CRISIL believes the GTPL group will continue to benefit from its established market position in the cable TV services segment. The outlook may be revised to 'Positive' if the group corrects its working capital cycle, leading to sustainable strengthening of financial risk profile. The outlook may be revised to 'Negative' if larger-than-anticipated, debt-funded capex, or a stretch in working capital cycle, or low revenue and profitability, weaken liquidity. |
| About the Group |
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GTPL was established in 2006 by Mr Anirudhsinh Jadeja, Mr Kanaksinh Rana, and other MSOs as Gujarat Telelink Pvt Ltd. The company got its present name after Hathway Cable & Datacom Ltd (HCDL) bought 50% stake in it in fiscal 2008. The company got listed on BSE and NSE in July 2017 and was converted into public limited. Currently, public holding is around 26.2% with balance equity being equally held by intial promoters and HCDL. It provides services such as analogue cable TV, digital cable TV, and broadband internet in states such as Gujarat, West Bengal and Maharashtra. |
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Any other information |
| Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
| Annexure - Details of Instrument(s) | ||||||||||||||||||||||||||||||||||||||||||
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | ||||||||||||||||||||||||||||||||||||||||||||||||
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| For further information contact: | ||||||
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