“Hathway Cable & Datacom Ltd.

Submitted To:
Mr. Hardik Pathak
Faculty, Financial Modeling, ASMSOC, NMIMS Deemed to be University

Subject: Financial Modeling

Submitted By:
E001: Aayush Parakh
E021: Hrishitaa Shah
E028: Madhav Gupta
E031: Mishka Jain
E045: Shivansh Bansal
E058: Aditya Agrawal
 Table of Contents

S.No. Particulars Page No.

1. About the Company 3
2. Economic Analysis 3
3. Industry Analysis 10
4. Company Analysis 17
5. Ratios 22
6. Valuation 26
7. Trade Call 32
8. References 35
9. Work Allocation 36
About the Company
The Mumbai-based Indian supplier of cable television and broadband services is Hathway
Cable & Datacom Ltd, formerly known as BITV Cable Networks. It was the pioneer cable
operator in India to introduce a digital platform in 2006 and the first company to offer Internet
access via the CATV network. India's first cable Internet service provider was Hathway
Broadband Internet.

Hathway began offering HDTV services in the second half of 2011 in the following cities:
Mumbai, Hyderabad, Bangalore, Chennai, Indore, and Kolkata; in Gujarat in 2013 and in
Odisha in 2015. In March 2012, the eight HD channels available on their new HD DVR set-
top box increased to sixteen. As of 2020, there are thirty channels accessible. Hathway now
has the most HD channels in its Indian market thanks to this expansion. In the Indian cities of
Delhi, Mumbai, Indore, Bhopal, Lucknow, and Kolkata, Hathway Broadband Internet was
among the first cable ISP services. The fastest speed that fibre can deliver as of 2024 is 300
Mbps. In three cities, when the rates surpass 50 Mbit/s, it makes use of Docsis 3 technology
from Cisco Systems.

Economic Analysis
Key Countries with which Hathway deals
Hathway is based out of India and provides its services in India across key Indian geographies
and offers cable television services across 140 cities and towns and high-speed cable broadband
services across 21 cities. The major countries with which Hathway deals is China, France, USA
and Thailand.

China: Hathway deals with China, specifically 'Skyworth' for its set-up box (SD and HD) and
modems. It also deals with 'ZTE' for its GPON (Gigabit Passive Optical Network).

France: Hathway deals with France, specifically 'Alcatel Lucent' for its CAS (Channel
Associated Signalling) and 'Technicolor' for its Modems.

USA: Hathway deals with USA, specifically 'Oracle' for its ERP and Billing system and 'Cisco'
for its NOC & OSS (Operations Support System). Hathway also has Content Peering / Caching
services with USA based companies like Meta, Google, Netflix etc.

Thailand: Hathway also has major dealings with Thailand for its advanced technology and
equipment provided by leading technology vendors from the country.

Key Economic Parameters

GDP
From a mixed planned economy to a mixed middle-income emerging social market economy,
India's economy has seen significant public sector involvement in key areas. India's economy
is third globally in terms of purchasing power parity (PPP) and fifth globally in terms of
nominal GDP. When considering per capita income, the country ranks 127th in terms of PPP
and 139th in terms of nominal GDP.
The GDP has grown on average by 6% to 7% per year since the beginning of the twenty-first
century. India is the world's sixth-largest consumer market, with domestic consumption
accounting for about 70% of GDP. India's GDP is driven by government expenditure,
investments, and exports in addition to private consumption. India ranked as the eighth largest
importer and the tenth largest exporter in the world in 2022.

In recent years, the telecom industry in India has grown at an incredible rate. As of March
2023, the telecom sector in India claimed to have the second-largest subscriber base in the
world, with 1.72 billion wireline and wireless users. Based on the Indian Telecom Services
Performance Indicators published by the Telecom Regulatory Authority of India, the country's
tele density, a measure of the number of phones per 100 people was 84.15% on March 31,
2023. Since March 2014, it has risen by almost 10%.

Having contributed 6.5% of the GDP to the Indian economy, the telecom sector is one of the
most significant ones. The industry brought in INR 85,356 Cr ($11.38 billion) in gross sales
during the final quarter of FY 2022–2023. The industry consists of telephone service providers,
broadband, 5G, White Space Spectrum, infrastructure, equipment, and mobile virtual network
operators (MNVO).

The key countries with which Hathway deals with have the following GDP as of FY 2022-23

China: USD 17.96 Trillion

France: USD 2.78Trillion
USA: USD 25.44 Trillion
Thailand: USD 495.42 Billion

Inflation
To calculate ones’ purchasing power, inflation is essential. To put it another way, inflation is a
phenomenon that raises costs for products and services over time, making consumers feel the
squeeze when it comes to their own finances, especially regarding spending and purchasing
patterns.

In India, the consumer price index (CPI) and the wholesale price index (WPI) are the two
indices used to calculate inflation. These two indices track monthly inflation while accounting
for variations in the methods used to determine changes in the cost of goods and services. The
study assists the government and Reserve Bank of India (RBI) in monitoring inflation by
helping them comprehend how market prices fluctuate.

Consumer pricing index (CPI) data indicates that retail inflation in India decreased from 5.69%
in December 2023 to 5.10% in January 2024. In contrast, the wholesale price index (WPI),
which determines the total cost of items before they are sold at retail rates, increased from
0.26% in November of last year to 0.73% in December of 2023. But the WPI moderated further
to a four-month low of 0.20% in February on an annual basis as against 0.27% in January.

The graph below shows the inflation rate in India for the past 10 years:
Source: tradingeconomics.com

The key countries with which Hathway deals with have the following inflation rates as of FY
2022-23:

China: 0.2%
France: 5.2%
USA: 8%
Thailand: 6.1%

Employment
India's employment market is expected to expand in 2024, as seen by the remarkable 19%
increase in hiring intent overall from the year before. In the constantly evolving Indian labour
market, 2024 is expected to be a momentous year when data and AI investments come together
to power the skilling ecosystem and the nature of employment in the future.

According to the report, greater implementation of ESG (environment, social, and governance)
standards is expected to generate employment growth in India, according to 61% of businesses.
This is followed by higher acceptance rates of new technologies (59%), and increased
accessibility to digital information (55%).

The key countries with which Hathway deals with have the following unemployment rates as
of FY 2022-23:

China: 5.2%
France: 7.3%
USA: 3.6%
Thailand: 0.9%

Tax Rate
The national and state governments of India impose a variety of taxes to raise money for
governance, infrastructure development, and public services. The main type of taxes in India
are Direct Taxes (Income Tax, Corporate Tax, Capital Gains Tax, Securities Transaction Tax),
Indirect Taxes (Goods and Services Tax (GST), Customs Duty, Excise Duty, Service Tax),
State Taxes (Value Added Tax (VAT), Entry Tax, State Excise Duty, Stamp Duty), Local
Taxes (Property Taxes, Professional Tax, Entertainment Tax).
The rate of corporate tax in India varies from one type of company to another i.e. domestic
corporations and foreign corporations pay tax at different rates. Additionally, depending on the
type of corporate entity and the different revenues earned by each of them, the corporation tax
rate differs based on a slab rate system. Presently for the assessment year 2019-2020, the
corporation tax rates in India are as follows:

The key countries with which Hathway deals with have the following tax rates prevalent in
their economy:

China: 25%
France: 27.5%
USA: 21%
Thailand: 20%

Exchange Rate
The value of the Indian rupee (INR) in relation to other currencies is referred to as the exchange
rate in India. The foreign exchange market sets these rates, which are impacted by several
variables including trade balances, inflation rates, economic conditions, and geopolitical
developments. The various exchange rates in India are Official Exchange Rate, Interbank
Exchange Rate, Retail Exchange Rates, Forward Exchange Rates.

The table below shows the exchange rates for various countries in respect to INR:
Source: X-rates.com

Hathway deals with countries like USA, France, Thailand, and China. Their exchange rates
have been highlighted in the above table.

Interest Rate
Interest rates have a significant impact on the financial markets and economy of India. They
have an impact on investment choices, borrowing and lending practices, inflationary pressures,
and overall economic growth. The various interest rates in India are Repo Rate, Reverse Repo
Rate, Bank Rate, Marginal Standing Facility (MSF) Rate, Prime Lending Rate (PLR), Marginal
Cost of Funds-based Lending rate (MCLR), Fixed Deposit (FD) Rates, and Saving Deposits
Rates.

Following table provides the competitive interest rates provided by Indian Banks on Fixed
Deposit:

Source: Groww
The key countries with which Hathway deals with have the following interest rates prevalent
in their economy:

China: 3.45%
France: 2.85%
USA: 5.5%
Thailand: 2.5%
Wages
In India, wages are the remuneration that employees receive in return for their labour and
services. Numerous factors, including industry type, skill level, geographic location, and legal
requirements, impact India's heterogeneous pay structure.

Pay varies according to the degree of experience and competence needed for a given position.
Professionals, technicians, and engineers are examples of skilled workers who command
greater compensation than unskilled or semi-skilled workers performing physical labour or
simple tasks. But the Government of India has passed The Minimum Wage Act which provides
for fixing minimum rates of wages in certain employments (unskilled or semi-skilled labour).

Following are the Wages Growth rate of the countries Hathway deals with:

China: 3.7%
France: 4.6%
USA: 5.72%
Thailand: 2.37%

Demographics
The following table provides the demographics of India and the countries with which Hathway
deals for comparison of economies

Particulars India China France USA Thailand

Population 1.44 1.409 68.4 334 71.7 million
billion billion million million
Life Expectancy 70.62 78.6 years 82 years 76 years 79 years
years
Median Age 28.62 39 years 41.59 38.1 years 41 years
years years
Percentage of Urban 36.4% 66.2% 81.51% 83.3% 52.89%
Population

Future of the key economic parameters and its impact on the company
India
India is emerging as a significant economic and geopolitical power. Its actions in the coming
year could lay the groundwork for the country to become the world’s third largest economy in
the next five years and a developed nation by 2047. India has been a major worldwide economic
development engine, accounting for 16% of global growth in 2023. With a 7.2% growth rate
in the fiscal year 2022–2023, the nation outperformed all other G20 nations and nearly doubled
the growth rate of emerging market economies in that same year. The majority of Hathway's
income comes from broadband service subscriptions from customers. Consumers typically
have more discretionary income to spend on luxuries like broadband internet during times of
strong GDP growth and as a result Hathway's services may rise. Since the inflation rates in
India have gone down this will help Hathway cover its costs for maintaining and upgrading its
broadband networks as well as acquire new equipment and technology.
China
China is currently the third largest economy and has a GDP growth rate of 3% and is continuing
to grow with companies and industries emerging across the country over all sectors. The
China’s inflation rate is expected to go up to 1.7% in 2024 and is projected to grow to 2.2% by
2025. This growth in inflation can have a negative impact on the company as it will lead to
higher prices for the goods produced that the company imports. China is also expected to
receive a real salary increase of 4.1% in 2024 making the cost of production higher. China is
also expected to have interest rates cut, thereby allowing corporates to take loans easily and
further be able to provide for the growing prices and wages. China is expected to reach 75-80%
urbanisation by 2035 thus making more and more of the population involved in the workforce
and having a positive impact not only for the home country’s companies but also the importers.

France
France is a major partner for Hathway and its hardware components. The France GDP is slowly
growing at a rate of around 2.5%. The company has slowed down its growth with the decrease
in government expenditure. Inflation is projected to go down to around 2.5 – 3% in the coming
year and eventually go down to 1.6% by 2026. This combined with decline in growth rate of
wages, this will lead to lowering of costs of production and provide a stable cost and help
hatchway get the hardware needed from the French companies like ‘Alcatel Lucent' and
'Technicolor' at cheaper and stable rates in future.

USA
USA being the largest economy in the world and a major supplier of information and Operating
systems for the company. It also has partners in USA that provide content peering / caching
services to Hathway like Meta, Google, Netflix etc. The USA is expected a GDP growth of
about 2%. USA currently is experiencing a hike in inflation and thus making the government
raise the interest rates, this has led to an economic turmoil in the county and further raising the
costs of manufacturing and wages in the country thereby causing the firms to raise prices. This
overall has had and is continuing to have a negative impact on ‘Hathway’ as it can lead to an
increase in importing costs and prices of the goods.

Thailand
Hathway’s most prominent dealings is with Thailand. It has a moderate GDP growth of around
2.5% for a developing country, on contrary the country is set to significantly lower its inflation
to around 1.5%. The wages are growing at a slow rate and most of the country’s workforce is
employed thus making it a country with less say given to the workers. With stiff and slow wage
growth rate and lowering inflation, the costs associated with the home country are subject to
decrease thus making it a favourable location for Hathway and making it more important in the
coming future as a trade partner.

Economic factors and their impact on the Financial Items

Hathway might thrive in India due of its robust GDP growth and declining inflation rates.
Reduced inflation rates can also aid Hathway in properly controlling expenses, hence bolstering
company profitability. On the other hand, Hathway may face difficulties because of rising
wages and China's growing inflation rates. Inflation-related increases in import costs may
influence the business's expenses and profitability. Some of these difficulties might be
lessened, though, if interest rates are lowered and loans become more accessible.

Although France's GDP is growing steadily and its inflation rate is falling, Hathway's business
may be impacted by the country's slower rise in government spending. Lower inflation rates
and consistent production costs, however, can help the business get hardware components at
competitive prices from French vendors.
Whereas, Hathway may suffer from economic unrest brought on by US inflation and rising
interest rates. The company's finances could be impacted by higher import duties and higher
product pricing, especially if it depends significantly on American-based content partners or
suppliers. Hathway might profit from Thailand's modest salary growth and declining inflation
rates. The company's finances may benefit from lower operating costs in Thailand, which could
make it a desirable trading partner in the future.

Therefore, it's essential for Hathway to adapt its business strategies accordingly to navigate
through varying economic landscapes across its operational regions.

Industry Analysis
Industry analysis is a strategic business assessment process that involves examining various
factors and trends affecting a particular industry or sector. It aids companies in comprehending
the larger environment in which they function and in making defensible choices about
investment, strategy, and resource allocation. By gaining useful insights into the competitive
landscape and market dynamics through industry analysis, firms can effectively discover
opportunities, manage risks, and devise strategies to achieve their goals. It provides the
framework for the industry's resource allocation, investment choices, market positioning, and
strategic planning.

Some of the key Industry Assessment parameters:

1. PESTLE Analysis
a. Political factors:
• Regulation and deregulation: Government rules pertaining to competition, spectrum
distribution, and licencing can have a big influence on telecom businesses.
• Government stability: An atmosphere that is favourable to investment and
expansion is guaranteed by political stability in important and key markets.
• Trade policies: The import and export of telecommunications services and
equipment may be impacted by international trade agreements and tariffs.

b. Economic factors:
• Economic growth: As businesses and consumers spend more on communication
services during times of economic expansion, the growth of the telecom sector is
frequently correlated with the state of the economy.
• Exchange rates: For telecom firms that operate internationally, fluctuations in
currency exchange rates can have an effect on the cost of importing services and
equipment.
 • Disposable income: Variations in the amount of disposable income can have an
impact on the amount of money that consumers spend on telecom services.

c. Social factors:
• Demographics: The demand for telecommunication services is influenced by
population patterns, such as urbanisation and the distribution of ages.
• Technological literacy: The demand for data services is driven by rising
technological literacy as well as the use of smartphones and other connected
devices.
• Consumer preferences: The services that telecom firms provide are influenced by
changes in customer preferences for digital communication channels, streaming
services, and mobile data.

d. Technology factors:
• Innovation: The Internet of Things (IoT), 5G networks, and artificial intelligence
(AI) are examples of how quickly technology is advancing, spurring investment,
and opening up new business prospects for telecom firms.
• Infrastructure development: To increase coverage and enhance service quality,
investments in fibre-optic networks and wireless towers are essential components
of broadband infrastructure.
• Data security: Protecting client data and network infrastructure from cyber security
threats is a concern for telecom firms.

e. Legal factors:
• Regulatory compliance: Telecom businesses have to abide by laws and rules
pertaining to consumer rights, antitrust, data protection, and privacy.
• Requirements for licencing: Adherence to legal frameworks is necessary to get
licences for spectrum allocation and operation in various locations.
• Intellectual property rights: To foster innovation and maintain a competitive edge
in the telecommunications industry, it is imperative that intellectual property, such
as patents and copyrights, be protected.

f. Environmental factors:
• Energy consumption: The substantial energy consumption of telecommunication
infrastructure, including data centres and network equipment, raises questions about
the sustainability of the environment.
• E-waste management: To reduce the negative effects on the environment, electronic
waste (e-waste) from obsolete telecom equipment must be properly disposed of and
recycled.
2. Porter’s Five Forces Analysis
a. Threat of new entrants:
• High Initial Investment: The need for large financial investments in technology,
spectrum licences, and infrastructure in the telecommunications sector prevents
new firms from entering the market.
• Regulatory Obstacles: Since new entrants must adhere to several legal and technical
norms, government rules and licencing procedures pose a hurdle.
• Economies of Scale: Long-standing telecom firms enjoy economies of scale, which
makes it difficult for newcomers to compete on price.

b. Bargaining power of suppliers:

• Equipment Manufacturers: For infrastructure like switches, routers, and towers,
telecom businesses depend on equipment manufacturers. Even though there are
many suppliers in the market, the specialised nature of the items offered by the
dominant providers may give them considerable bargaining strength.
• Spectrum Auctions: Spectrum owners have significant bargaining leverage because
obtaining spectrum licences from regulatory bodies requires them to bid against
other telecom providers.

c. Bargaining power of buyers:

• High customer switching cost: Because of contract obligations, device
compatibility, and network coverage, customers frequently incur significant
switching charges when transferring telecom service providers.
• Price Sensitivity: When selecting telecommunication services, customers are often
price sensitive, particularly in regions where numerous suppliers offer comparable
services.
• Availability of substitutes: By offering options to traditional telecom services, the
availability of replacements, such as internet-based communication platforms (such
VoIP and messaging applications), strengthens the negotiating position of buyers.

d. Threat of substitute products:

• Internet-based Services: As a result of technological advancements, internet-based
communication services have proliferated and are a threat to established telecom
services like SMS and voice calls.
• Wireless technology: Emerging wireless technologies provide alternatives to
traditional wired telecom services. Examples of these are Wi-Fi calling and satellite
communication.
• Convergence: New replacement products are introduced and industry borders are
blurred because of the convergence of services like media, technology, and
telecommunications.

e. Rivalry among Existing Competitors:

• Tough Competition: The telecom sector is marked by a high level of competition
between the current companies, which results in aggressive marketing tactics and
pricing wars.
• Market Saturation: As subscriber growth has slowed in mature markets, established
firms are fighting for market share more fiercely.
 • Technological Innovation: Businesses compete by trying to set themselves apart
with better network quality, cutting-edge services, and packaged deals. This is due
to the rapid growth of technology.

Overall, there is moderate to high levels of competition in the telecommunications sector,

and the industry landscape is shaped by entrance obstacles, legal restrictions, and
technological changes. Organisations who want to stay ahead of the curve in this fast-paced
industry need to constantly innovate and set themselves apart from other companies.

3. Contribution of sector to GDP

The Telecom Industry in India has grown at an incredible rate. As of March 2023, the
telecom sector in India claimed to have the second-largest subscriber base in the world,
with 1.72 billion wire line and wireless users. With a 6.5% GDP contribution, the telecom
sector is one of the most significant in the Indian economy. The industry's gross revenue
for the final quarter of FY 2022–2023 was INR 85,356 Cr ($11.38 billion). Infrastructure,
equipment, White Space Spectrum, 5G, Telephone service providers, Mobile Virtual
Network Operators (MNVO), and Broadband are all included in this industry. India's digital
economy is projected to be valued $1 trillion by 2025. Over the previous seven years, there
has been a significant 65% growth in the Indian telecom tower sector. Between 2023 and
2040, 5G technology is expected to generate a $ 450 billion economic gain for India.

4. Competition Structure
Hathway's main rivals include Den Networks and Citi Networks Ltd. These businesses
compete in the nation's cable television and broadband markets and operate in almost the
same regions as Hathway.
In the broadband market, Hathway is also up against firms like Airtel Broadband and
Reliance Jio.

Competition Analysis:
• Service Offerings: Broadband and cable television services are the main products that
Hathway, DEN Networks, and Siti Networks provide. In addition to broadband
services, Reliance Jio and Airtel Broadband both provide digital TV and mobile cellular
services. Competitors of Hathway have an upper edge in this criterion as they have a
larger product portfolio to offer.
• Technological Progress: Jio's JioFiber service competes with established cable TV and
broadband providers by providing bundled services including OTT subscriptions along
with high-speed internet.
• Geographic Presence: Each region has different competitors. Hathway encounters
increased competition from regional or local cable companies in various places. They
need to increase their presence in the country and improve on the quality of the services
provided.
• Pricing Strategies: To draw clients, businesses frequently compete on price, providing
attractive rates and bundles and a sector such as the telecom sector, it is known for
aggressive pricing wars among the rival firms. The firms must ensure they work on
their pricing as well as profitability side by side.
The above pie chart depicts service provider wise market share of broadband segment. In this
segment Reliance Jio Infocomm Ltd., with 9.40 million customers, Bharti Airtel, with 6.71
million, BSNL, with 3.68 million, Atria Convergence Technologies, with 2.18 million, and
Hathway Cable & Datacom, with 1.12 million, were the top five providers of Wired Broadband
Service as of July 31, 2023.
Future of the parameters and its impact on the company
Given the desire for local and specialised content as well as the ongoing digitization of
distribution infrastructure, the market size for broadcasting and TV market is expected to grow
at a rate of more than 3% CAGR between 2024 and 2032. Because of the demand for local and
specialised content as well as the ongoing digitization of distribution infrastructure, the market
size for broadcasting and cable TV is expected to grow at a rate of more than 3% CAGR
between 2024 and 2032.

It is anticipated that several factors, such as regulatory changes, growing customer tastes,
technology breakthroughs, and competitive dynamics, would impact the telecom industry in
India in the future. The Asian broadcasting and cable TV industry is expected to grow rapidly
between 2023 and 2032, driven by the growing popularity of subscription video-on-demand
and more customisation options. An increasing number of people, especially in developing
countries, can now access cable TV and broadcasting services thanks to the availability of
inexpensive internet plans and an increase in IPTV usage. Significant growth potential for the
regional industry are presented by the large number of homes in India's rural areas and the
availability of reliable internet connections in these locations.
The government has also taken various steps to promote this industry. The govt. has made
amendments to the Cable Television Rules-1994 which grants registration for multi-system
operators for a 10-year period and made the whole process online. There is also a amendment
in the Television Networks Act, 2011. The govt. aims in digitising the whole cable tv segment.
The above image portrays government policies to achieve its 2047 objectives. With the advent
of the global requirement for telecommunication services and keeping in mind all the above
parameters:
• Extension of Broadband Services: Hathway's capacity to extend its broadband services will
likely play a significant role in its future development, particularly in metropolitan and
semi-urban areas where the demand for high-speed internet is rising. Investing in
technology and infrastructure to provide internet connections that are quicker and more
dependable may be a crucial tactic. They must ensure they keep in mind the ongoing trend
and be able to capture a larger market
• Transition to Digital and OTT Platforms: Hathway faces both opportunities and challenges
because of the growing ubiquity of over-the-top (OTT) services and digital streaming
platforms. In this regard there are news that shows that Hathway intends to converge cable
TV, broadband and TV services.
• Hathway plans to capex of Rs. 1400 over the next three years to fund their plans.
• With a rising demand for high-speed network, Hathway’s FiberMax can play a huge role
in keeping them in market. It offers high speed data which can prove to be quite useful for
corporates as well as various other institutions.

Even though with all the advancements in technology and increase in TV market, the cable TV
segment has suffered a lot and faced a decline. It is supposed to be declining over a rate of -
0.39% CAGR. Firms like Hathway, DTH need to constantly update their technology. They
must continue R&D and innovate newer products to keep with the high paced consumer
demands and compete with its competitors in the segment to maintain or grow its market share.
Prediction of Financials for the sector
Sales: Government of India announced National Internet mission in 2022 aiming to improve
connectivity in Rural Regions of India which will lead to increase in Sales of the Sector.
The rural sector has been already generating a CAGR of 15% in the past high growth period.
Current expected growth is around 4% in total sales of the sector, towards reduction.
Price Packages: Due to market competition selling price may reduce and volumes may increase
leading to stagnant growth patterns.
Current expected growth after taking a trend of 5 years in sector is 16%.

Expenses:
• Cost of Spectrum/Government Licensing fees- with promotions in the sector, the fees are
expected to be stable or diminish for the upcoming years. Excise duty is expected to rise
by 14%.
• Raw Materials- Cost of Raw materials may increase by 54%, based on year-on-year trend.
• Employee cost-Employee cost for sector may increase by 2%
• Selling and Admin Expenses- They are rising to due to increasing competition and rising
connections in India. Expected to increase at 41%
• Fuel and Power- Fuel and Power are expected to rise because of rising global fuel prices
and increase in machinery at the rate of 12%.
• Total Expenditure- Total Expenditure in the sector is increasing at a rate of 8% due to
inflation and other market driven costs.

Profit:

• Operating Profit- Operating profit is expected to increase at a rate of 2% showcasing low

profit margins due to increased competition and drive to acquire market share.
• Net Profit Margin- Net Profits are decreasing at the rate of 12%, due to expansion plans
and increased costs.
 Growth
Year 2024 2023 2022 2021 2020
Rates
INCOME :
Sales Turnover 16% 4,34,024.00 3,07,988.36 2,74,431.72 2,54,274.25 2,39,240.15
Excise Duty 14% 16,285.27 16,052.00 13,862.79 12,641.13 9,760.89
Net Sales 16% 4,17,738.73 2,91,936.36 2,60,568.93 2,41,633.12 2,29,479.26
Other Income 48% 28,975.90 23,359.86 11,104.52 7,385.64 17,326.60
Total Income 17% 4,46,548.14 3,15,302.09 2,71,704.83 2,49,019.07 2,46,787.18
EXPENDITURE :
Raw Materials 54% 12,570.45 3,193.60 4,540.75 3,564.23 3,273.90
Power & Fuel
Cost 12% 47,777.57 34,402.71 32,735.85 30,125.07 29,280.74
Employee Cost 2% 23,326.87 17,796.02 16,937.00 16,009.66 25,457.10
Other
Manufacturing
Expenses 6% 1,08,007.52 83,876.46 78,427.54 82,253.75 87,469.03
Selling and
Administration
Expenses 41% 40,873.61 15,761.93 13,405.98 12,438.59 12,319.93
Miscellaneous
Expenses 41% 72,567.71 46,590.23 19,478.56 59,735.24 1,60,470.52
Total
Expenditure 8% 3,05,012.22 2,01,537.00 1,65,417.77 2,03,934.73 3,17,800.64
Operating
Profit 2% 1,41,535.93 1,13,765.12 1,06,287.00 45,084.42 -71,013.43
Interest 12% 81,665.06 62,615.47 61,098.66 50,643.90 49,840.41
-
Gross Profit -193% 59,870.87 51,149.65 45,188.34 -5,559.48 1,20,853.84
Depreciation 9% 1,02,522.94 81,160.18 74,986.89 71,910.60 71,786.71
Profit Before -
Tax -16% -42,652.07 -30,010.53 -29,798.55 -77,470.08 1,92,640.55
Tax 42% 3,028.09 947.94 865.87 654.3 1,768.46
Reported Net -
Profit -13% -51,333.69 -38,142.00 -35,679.91 -89,241.75 1,91,268.49

Company Analysis

1. Product Portfolio
Hathway Cable and Datacom Limited is one of India's leading cable broadband service
providers. It was formerly known as BITV Cable Networks and it was the first company to
provide Internet using the CATV network in India, and the first cable operator to launch a
digital platform in 2006.
Its product portfolio includes:
• Broadband Services: Hathway offers high-speed internet services to residential and
commercial customers.
• Digital Cable TV: The company provides digital cable television services, offering
a wide range of channels and packages.
• OTT (Over-the-Top) Services: Hathway offers OTT services through partnerships
with streaming platforms like Netflix, Amazon Prime Video, and others.
 • Value-added Services: Additional services such as VoIP (Voice over Internet
Protocol), gaming, and home networking solutions.

2. Geographical Segments
Hathway is headquartered in Mumbai, Maharashtra. In 2011, Hathway GTPL entered
Assam with an MoM with V&S Cable Pvt Ltd, and started operations in West Bengal as
they acquired KCBPL (Kolkata Cable & Broadband Pariseva Ltd) to create a subsidiary,
GTPLKCBPL, responsible for providing services in West Bengal. In the second half of
2011, Hathway launched its HDTV services in Mumbai, Hyderabad, Bangalore, Chennai,
Indore, Kolkata; in Gujarat in 2013, and Odisha in 2015. Their new HD DVR set-top box
initially provided 8 HD channels, with availability increasing to sixteen in March 2012.
There are thirty channels available as of 2020. With this addition, Hathway is now the
provider with the most HD channels in its Indian market.
Hathway Broadband Internet was one of the earliest cable ISP services in the Indian cities
of Delhi, Mumbai, Indore, Bhopal, Lucknow and Kolkata. As of 2024, the highest possible
speed provided via fiber is 300Mbit/s. It uses Cisco Systems's Docsis 3 technology in three
cities, where the speeds exceed 50 Mbit/s.
Hathway primarily operates in urban and semi-urban areas across India. Its services are
available in various cities and towns, with a focus on metropolitan regions where there is
higher demand for broadband and cable TV services.

3. Customer Profile
Hathway's customer base includes residential households, businesses, and enterprises. Its
services cater to a diverse range of demographics, including students, professionals,
families, and corporate clients. The company targets both mass-market consumers and
niche segments with specialized offerings.
There are around 11 million subscribers, of which around 1.77 million currently have
wireless/broadband internet available. Approximately 430,000 of these users are using
Hathway broadband services.

4. Company Moat
Hathway has established a strong competitive position in the Indian market through the
following moats:
• Infrastructure Advantage: Hathway owns and operates a robust cable network
infrastructure, including fiber-optic cables and distribution hubs, which gives it a
significant advantage in delivering high-speed broadband and digital TV services.
• Brand Recognition: The company has built a reputable brand known for its reliable
and high-quality services, which helps in customer retention and acquisition.
• Partnerships and Content Agreements: Partnerships with leading OTT platforms
and content providers enable Hathway to offer exclusive content and bundled
services, enhancing its value proposition for customers.

5. Key Contracts
Hathway may have key contracts with content providers, technology vendors, and other
stakeholders to secure access to content and infrastructure necessary for its operations.
 Specific details regarding these contracts would need to be obtained from the company's
financial disclosures and annual reports.

6. Key Plant Locations and Logistics:

Hathway's key plant locations would include its data centers, distribution hubs, and regional offices
spread across different regions of India. Efficient logistics management is crucial for the company
to ensure timely deployment of network equipment, maintenance services, and customer support.

7. Corporate Governance Evaluation

• Board Structure and Independence:
Hathway's board of directors plays a crucial role in overseeing the company's operations
and strategic decisions. The board comprises of a diverse mix of skills, expertise, and
backgrounds relevant to the company's industry and operations. Hathway's board
composition reflects a balance of executive and independent directors.

Independent directors form a significant portion of the board to ensure impartial

decision-making and effective oversight.

It is necessary to review the roles and responsibilities of the board, including its
committees, and evaluate how effectively they fulfil their duties in governance and
oversight.

• Transparency and Disclosure:

Transparency and disclosure are essential for maintaining investor confidence and
ensuring accountability. Hathway's transparency and disclosure practices can be
evaluated based on their financial reports, Disclosure Practices, and Investor
Communication from their annual reports.

• Shareholder Rights:
Protecting shareholder rights is essential for promoting investor confidence and
corporate governance integrity. On evaluating Hathway's shareholder rights policies,
by studying their Voting Procedures, Dividend Policies and Shareholder Engagement,
we can say that these dimensions provide insights into the company's commitment to
transparency and accountability.
Financials and Forecasts
Revenue
Hathway Cable and Datacom Limited (HCDL) is currently running at a growth rate of 4% in
revenue in consolidation. The subsidiaries also show positive trends in revenue. The current
company strategy in to create mass penetration, being facilitated by increasing the depth of
their broadband services due to a greater number of cities. Presently, the company has banked
1.12 million subscribers and operates in more than 700 cities. The current capex plans of major
subsidiaries like GTPL Hathway, is only going to increase this number and therefore we can
expect increase in revenue.
Another reason for increasing revenue is their current product placement. Hathway is actively
promoting its new FiberMax plan which offers 300 mbps data and 2 TB download/upload
power. This plan is mainly focused at increasing topline. Two major consumers for Hathway
in broadband are corporate offices and IT companies and provisions of these sort, actively
coincides with needs of current startup culture, which amasses a market of 180 billion in India
as of now. This increase in topline will further push the revenue. Although the bottom-line
consumers in broadband are switching, the company is trying to skim revenue through its FTTP
services. They are planning to include major OTTs which can push bottom-line revenue in the
CATV business where they have 48% of consumers.
Profit After Tax
The company has shown a negative trend in profit after tax in consolidation for the last financial
year FY23-24. The current quarterly reports though have shown a positive trend in
consolidation. This is contradicted by the profitability of major subsidiaries like GTPL
Hathway and Hathway Digital Limited which have shown negative trends in PAT (Profit After
Tax). We can infer that the last financial year has been capex heavy and any company that
follows penetration, goes through heavy capex costs and operating costs on low revenue on the
outset.
We can estimate through the ongoing strategy that the profitability of the subsidiaries is going
to follow a negative trend for the coming quarters and maybe for the financial year FY24-25,
but the succeeding year can show positive trends as these companies will start generating return
on their Capex. The company comes predominantly from a profitability mindset and in
consolidation is PAT positive, and we feel that the trend for PAT in consolidation might remain
positive as the company is maximizing on its cash cows. The company also positions itself to
the shareholders as a profit-driven and constant dividend distribution model company and
therefore, the growth could be adjusted in consolidation to get the desired positive trend.
EBITDA Margins
The telecom industry determines their EBIDTA margins as a major KPI and therefore we have
conducted a study on the EBIDTA structure of the company. The last annual report of FY23-
24 shows a positive trend in EBIDTA margins with increase of 14% CAGR in different
subsidiaries. The company’s commitment to acquire consumers through active advertisements
and capex heavy installations has increased the interest on loans and operating costs. This is
going to continue for the company for the coming years and we estimate that the EBIDTA
margins are going to follow a negative trend. This can be seen in quarterly reports for FY24. It
is also difficult for the company to position themselves in front of their wireless counterparts
in the bottom-line and therefore the customer acquisition cost is high.
Subscribers
A major KPI for telecom industry is to understand its subscribers. Currently the company has
1.12 million subscribers where 5.2 million come from the broadband set of operations while
remaining 4.9 million come from CATV division. The subscriber base has increased from last
year’s 1.11 million subscribers and they estimate a further increase in the same. On an industry
level, the number of wired broadband users have also increased from 21 to 26 million in 2023-
24 and is supposed to go to 32. Although the composition of company’s subscriber in
broadband operations is topline heavy and there is high switching among bottom line
subscribers to wireless services for their affordability and convenience. The “no time lag”
proposition is defeated in mobility in bottom line. We estimate the subscribers to increase with
ongoing penetration, but we also feel in broadband operations, it will remain topline heavy.
Although, the company can fetch bottom line in CATV category.
CAPEX
The capex is increasing and has a continuous positive trend. GTPL Hathway has planned 1500
crores for the coming year in expansion. The other subsidiaries plan the same and therefore,
we expect that the coming year is going to see increase in Capex with ongoing penetration.
However, the company will then reduce Capex in order to create returns on current expansions
and then it can be a negative trend. The other subsidiaries that are currently running in losses
also are getting depraved due to this penetration strategy but the overall operations are profit
positive.
Operating Costs and Price

The company is in a constant price pressure and therefore will decrease prices in the coming
year to compete with market forces specially the wireless sector. Although, this decrease in
price is estimated to be inflation adjusted. The price volatility is high in telecom sector as the
consumers are highly price sensitive. Moreover, the telecom industry is dominated by major
players like Bharti Airtel and Reliance Jio Infocomm Limited, who have reduced the prices of
the entire industry. As compared to the entire world, India offers telecom services at among the
lowest prices. Prices will go down to acquire bottom-line customers while skimming topline.
The company is also working towards reducing operating cost and we estimate decrease in
operating cost with advent and use of AI and smart technology by company and its subsidiaries.
The company is conducting all the feedback on AI and is better optimizing customer relations.
The company has also followed on its LCO system in order to optimize consumer handling
charges. Their complaint rate has gone to 4% and they have also made the system efficient and
provide at home solution for FTTH services within 7 days. Following extract shows price
sensitivity –
RATIOS
Profitability Ratios
Financial indicators called profitability ratios are used to evaluate a company's capacity to turn
a profit in relation to its equity, assets, revenue, and other financial parameters. These ratios
offer valuable insights into a company's profitability and efficiency in allocating its resources
to producing earnings.

The following graphs show the profitability ratios for Hathway Cable & Datacom Ltd.:

Solvency Ratios
Financial indicators known as solvency ratios assess a company's capacity to pay long-term
debts and maintain long-term financial stability. These measures evaluate the company's
capacity to pay off debt and carry on with business as usual without experiencing financial
hardship or declaring bankruptcy. For creditors, investors, and management to assess a
company's financial stability, solvency ratios are essential.

The following graphs show the solvency ratios for Hathway Cable & Datacom Ltd.:
Activity Ratios
Activity ratios are financial measurements that show how well a business uses its assets and
resources to produce income. They are sometimes referred to as efficiency ratios or asset
utilisation ratios. These statistics shed light on how successfully a business uses its assets to
produce revenue or sales as well as how effective and efficient its operations are. Activity ratios
are essential for evaluating operational effectiveness and pinpointing areas where resource and
asset management needs to be improved.

The following graphs show the activity ratios for Hathway Cable & Datacom Ltd.:
Liquidity Ratios
The ability of a business to pay its short-term debts without experiencing financial difficulties
is assessed using liquidity ratios, which are financial indicators. The ratios evaluate the
company's capacity to promptly transform its assets into cash to meet its immediate obligations.
A company's short-term financial health and capacity to withstand unforeseen costs or
downturns in the business environment are evaluated using liquidity ratios.

The following graphs show the liquidity ratios for Hathway Cable & Datacom Ltd.:

Du-Pont Analysis
DuPont analysis is a framework for financial analysis that breaks down return on equity (ROE)
into its constituent parts to reveal the elements influencing a company's profitability. It is
sometimes referred to as the DuPont identity or DuPont model. The DuPont Corporation
created the DuPont analysis in the early 1900s to increase its return on equity. It breaks down
ROE into 3 key components: Profit Margin, Asset Turnover, Financial Leverage.
The following graph show the DuPont Analysis for Hathway Cable & Datacom Ltd.:

DuPont Analysis
1.400 45.00%

1.200 40.00%
35.00%
1.000
30.00%
0.800 25.00%
0.600 20.00%
15.00%
0.400
10.00%
0.200 5.00%
0.000 0.00%

Total Asset Turnover Fincial Leverage Net profit margin DuPont Analysis (ROE)
VALUATION
Relative Valuation
Relative valuation models are business valuation techniques that evaluate a company's
financial worth by contrasting its value with that of its rivals or industry peers.
When it comes to relative valuation, some of the most popular and practical measures to use
are:

a. P/E (Price to Earnings) Ratio: This ratio calculates the current share price of a business in
relation to its earnings per share (EPS). It is computed by dividing the market price per
share by the earnings per share (EPS). A high P/E ratio may be a sign of overvaluation,
whilst a low ratio may imply undervaluation of the company.

b. P/S (Price to Sales) Ratio: The market capitalization, or share price, of a business is
compared to its total sales revenue in this ratio. It is computed by taking the market price
per share and dividing it by the total revenue (sales) for a given time frame.

c. P/BV (Price to Book Value) Ratio: The market value and book value of a corporation are
contrasted using this ratio. By dividing the market price per share by the book value per
share, it is computed. If the P/BV ratio is less than 1, it might be a sign that the stock is
cheap, and if it is more than 1, it might be a sign that it is expensive.

d. EV/EBIT Ratio: This ratio calculates the total business value of a company in relation to
its earnings before interest and taxes, or EBIT. By dividing the enterprise value (EV) by
EBIT, it is computed. Investors can better grasp how much they are paying for the
company's operational earnings by looking at this ratio.

e. EV/EBITDA Ratio: This ratio evaluates a company's whole business value in relation to its
earnings before interest, taxes, depreciation, and amortization (EBITDA), much like
EV/EBIT does. By dividing the enterprise value (EV) by EBITDA, it is computed. When
comparing businesses with various capital structures or depreciation schedules, this ratio is
frequently employed.

For calculating the industry average and comparing Hathway Cable & Datacom Ltd. to its
competitors we have taken the following companies from the telecommunication sector:
i. Den Networks Ltd.
ii. GTPL Hathway
iii. TATA Communications Ltd.

The following tables show the above-mentioned ratios for all 4 companies as well as the
industry average:
Analysis:
i. TATA Communications Ltd. has a greater P/E ratio, suggesting it is relatively
overvalued, whereas Den Networks Ltd. and GTPL Hathway have lower P/E ratios,
suggesting they are comparatively undervalued in relation to Hathway.

ii. While the P/S ratios of Den Networks Ltd. and GTPL Hathway are comparable, TATA
Communications Ltd.'s P/S ratio is greater than Hathway's, suggesting that it is
comparatively overvalued based on sales.

iii. While GTPL Hathway and TATA Communications Ltd. have greater P/BV ratios,
suggesting they are comparatively overvalued based on book value in comparison to
Hathway, Den Networks Ltd. has a lower P/BV ratio, suggesting it is undervalued in
comparison to Hathway.

iv. In comparison to Hathway, Den Networks Ltd. exhibits a substantially lower EV/EBIT
ratio, suggesting a lower level of enterprise value risk. Meanwhile, TATA
Communications Ltd. and GTPL Hathway. Additionally, GTPL Hathway and TATA
Communications Ltd. have higher ratios, suggesting comparatively more risk, Den
Networks Ltd. has a significantly lower EV/EBITDA ratio, showing it is relatively less
hazardous in terms of enterprise value compared to Hathway.

v. Investors are prepared to pay more for each unit of earnings when compared to the
industry average, as indicated by Hathway's higher P/E ratio. Whereas, given that
Hathway's P/S ratio and P/BV ratio is below the industry average, investors may be
paying less per unit of sales and less per unit of Book Value than they would be on
average.

vi. Because the company's EV/EBIT ratio is higher than the industry average, it may
indicate that its enterprise value is comparatively higher than its EBIT. On the other
hand, when compared to the industry, Hathway's EV/EBITDA ratio is comparable,
suggesting that the company's enterprise value is in line with its EBITDA.
To calculate the MPS of Hathway Cable & Datacom Ltd. using Enterprise Valuation we have
used 2 methods:

The market price of Hathway Cable & Datacom Ltd.’s share as at 31st March 2023 is Rs. 12.95.
Using Method 1 (EV/EBITDA) the market price of the share comes out to be Rs 10.71 which
is lower than the Market Price (Rs. 12.95). This indicates that the share is overvalued in the
market as on 31st March 2023.
Similarly using Method 2 (Using Market Capitalization) the market price of the share comes
out to be Rs 12.09 which is lower than the Market Price (Rs. 12.95). This indicates that the
share is slightly overvalued in the market as on 31st March 2023.

DCF Valuation (Discounted Cash Flows)

Hathway Cable and Datacom Ltd. is a company that is involved in providing telecom and
internet services to their consumers. The DCF (Discounted Cash Flow) is used by firstly
approximating the fundamentals of the company. We have predicted the upcoming revenue
trends, cost trends, leverage trends and expected cash flows in alignment to management’s
planning to develop on to further values for calculating the value of firm. The life of the asset
and the growth trajectory has also been based on these trends. This has enabled us to value the
company and understand the validity of market movements and actively compare the intrinsic
value to market value of company.
The discount rates and assumptions are further elaborated in each method under DCF – FCFF
(Free Cash Flow to Firm) and FCFE (Free Cash Flow to Equity). The company is going through
active expansion and is trying to enter new markets with a planned capital expenditure of 1500
crores that will be exercised in lots over a span of 10 years (basis of assumption for time horizon
assumed for the company). The mass replication has enabled to us to estimate maturity period
of every market entry and thereby understand debt requirements and company’s route to handle
situations.
All the assumptions are done according to our interpretations and doesn’t offer an absolute
accurate value. The values are subject to changes based on market movements and dynamic
movements of business. The time horizon taken for estimation is 10 years in which growth
trends are as follows –
 1) High Growth Period (FY24 – FY26)
2) Turbulent Period (FY27 – FY28)
3) Transition Period (FY29 – FY32)
4) Slow Growth Period (FY33 – Beyond)

Determination of Cost of Capital

The cost of capital is a major assumption to determine discounted cash flows. The calculated
metrics are utilized as discounting factors and determine the present value of the firm, after
discounting future cash flows. The calculation has been done as follows –
1) Cost of Debt – The cost of debt has been calculated by assuming an interest rate of 12%.
This is the average rate at which company has been borrowing funds in the past. The interest
rate is then adjusted post-tax and the tax rate is 26.3% (assumed). The post-tax cost of debt
is calculated to be 9.20%. This cost is taken to be constant for the entire time horizon

2) Cost of Equity – The cost of equity has been calculated using the CAPM (Capital Asset
Pricing Model) This model calculates the cost of equity by assuming the additional return
over the risk-free rate of return. The risk-free rate of return is estimated to be 7%
approximated, based on average return of g-sec and gilt bonds. The other components are
calculated as follows –

Beta – The beta calculation is done by firstly calculating industry levered beta. The industry
levered beta is calculated by firstly listing the relative companies of telecom sector.

NIFTY
Company 500 Financial Year Debt/Equity PBT in year of Profit (In PAT in year of Profit (In Tax Leverage Unlever
Name Beta Recording Profit Ratio Crs.) Crs.) Rate Factor ed Beta

GTPL 1.14 31 March 2023 - 57.10 57.10 0% 100% 1.14

MTNL 2.71 31 March 2024 - -2,910.74 -2,910.74 0% 100% 2.71

OnMobile
Global 2.05 31 March 2022 0.01 26.71 15.64 41% 101% 2.04

Railtel Corpn. 2.40 31 March 2023 0.02 252.58 187.38 26% 101% 2.36

Tata Comm 1.28 31 March 2023 0.10 981.03 666.15 32% 107% 1.20

Uniinfo
Telecom 2.08 31 March 2020 0.17 1.32 0.95 28% 112% 1.85

Vodafone Idea 2.35 31 March 2016 1.42 4,070.85 2,646.29 35% 192% 1.22

1.79

After selecting the relative companies, we have used the NIFTY 500 index to determine the
company beta trends. The beta is unlevered using leverage factor determined by seeing the
profit and debt structures of these companies. Once the beta is unlevered, the beta is averaged
out.
 Year 31/03/24 31/03/25 31/03/26 31/03/27 31/03/28 31/03/29 31/03/30 31/03/31 31/03/32 31/03/33

Unlevered Industry Beta 1.79 1.79 1.79 1.79 1.79 1.79 1.79 1.79 1.79 1.79

Tax Rate 26.30% 26.30% 26.30% 26.30% 26.30% 26.30% 26.30% 26.30% 26.30% 26.30%

Debt to Equity Ratio 0.05 0.05 0.05 0.05 0.06 0.06 0.06 0.06 0.07 0.07

Leverage Factor 1.03 1.04 1.04 1.04 1.04 1.04 1.05 1.05 1.05 1.05

Beta 1.85 1.86 1.86 1.86 1.87 1.87 1.87 1.88 1.88 1.88

The unlevered beta is then levered using the leverage factor determined using our companies’
leverage positions. This is how beta is determined.
Market Returns – Market returns are generated by first calculating the average of daily returns
of preceding 5 years of Nifty 500 index and then using the trend function to linearly forecast
the market returns for the next 5 years. This trend is then shown to go through a transition
towards an average return of 10%. This is done analyzing the injections in market due to current
repo rate changes and post-COVID recoveries. In the subsequent 5 years, its assumed market
will stabilize.

Ultimately the cost of equity is calculated by using all these components. The cost of equity is
high for the first few years but later goes through a decrease as market stabilizes.
3) WACC (Weighted Average Cost of Capital) – It is calculated by assigning weights to
cost of equity and debt based on companies’ debt-equity structure. The company plans
to go debt-free by year 10 and therefore the trend is also negative for WACC.

COST OF
EQUITY 38.8% 42.8% 46.9% 50.9% 55.1% 46.6% 38.1% 29.6% 21.1% 12.5%

COST OF DEBT 9% 9% 9% 9% 9% 9% 9% 9% 9% 9%

4,589.7 4,676.3 4,751.6 4,815.6 4,868.1

EQUITY 2 6 7 2 9 4,949.20 5,018.78 5,088.36 5,158.13 5,227.71

DEBT 216.64 232.25 245.66 261.46 280.62 224.4968682 168.3726511 112.2484341 56.12421705 0

WACC 37.45% 41.23% 45.02% 48.79% 52.57% 44.99% 37.20% 29.20% 20.98% 12.54%

FCFF (Free Cash Flow to Firm)

Free cash flow to the firm (FCFF) represents the cash flow from operations available for
distribution after accounting for depreciation expenses, taxes, working capital, and
investments.
The company has calculated free cash flow to firm by primarily identifying the WACC
(Weighted Average Cost of Capital) which assumes both – cost of equity and debt and
calculates a weight based on debt-equity structure. The company has a FCFF that shows
tremendous growth in FY24 – FY26 (High Growth Period). We can infer that, post-first year,
the company has generated returns on the capital expenditure. These returns are then re-
invested to generate further returns. The next 2 years are turbulent period because the company
has used up its cash reserves to fund the next set of capital expenditures. This has reduced the
amount of free cash flow to firm.
We are assuming that this is when the company will raise more money and move towards stable
growth rate. This process will take another 4 years. The stable growth rate is assumed to 7%,
which is risk free rate of return. The terminal value is calculated based on this stable growth
rate.
High Growth Period Turbulent Period Transition Period Terminal Value

Year 1 2 3 4 5 6 7 8 9 10

Mar-24 Mar-25 Mar-26 Mar-27 Mar-28 Mar-29 Mar-30 Mar-31 Mar-32 Mar-33

PAT 51.15 86.64 75.31 63.96 52.57

Interest (1-t) 18.40 19.17 19.96 20.79 21.65

Depreciation, Amortization and Impairment 115.92 152.19 170.39 179.71 172.89

CAPEX 200.00 8.30 8.65 9.01 9.38

Change in WC -30.22 -27.67 -16.62 -13.85 -11.48

FCFF (44.75) 222.02 240.39 241.60 226.26 259.66 279.82 300.83 322.65 6,229.11

These cash flows are then discounted to see the present value of firm.
Value of Equity 2300.68

No of Shares 177.01

Value per share 12.997

The intrinsic value of firm is calculated by dividing the value of firm by total number of
outstanding shares.

FCFE (Free Cash Flow to Equity)

Free cash flow to equity (FCFE) is a metric of how much cash can be distributed to the equity
shareholders of the company as dividends or stock buybacks—after all expenses,
reinvestments, and debt repayments are taken care of. Free cash flow of equity assumes cost of
equity as its discounting factor. The FCFE follows a similar trend during the 10-year time
horizon. The free cash flow to equity although remains very low as compared FCFF because
the capital expenditure for the first year is funded by debt. In subsequent years, the FCFE
although shows positive trend because the capital expenditure is then adjusted by cash available
in the bank.
High Growth Period Turbulent Period Transition Period Terminal Value

Year 1 2 3 4 5 6 7 8 9 10

Mar-24 Mar-25 Mar-26 Mar-27 Mar-28 Mar-29 Mar-30 Mar-31 Mar-32 Mar-33

PAT 51.15 86.64 75.31 63.96 52.57

Interest (1-t) 18.40 19.17 19.96 20.79 21.65

Depreciation, Amortization and Impairment 115.92 152.19 170.39 179.71 172.89

CAPEX 200.00 8.30 8.65 9.01 9.38

 Change in WC -30.22 -27.67 -16.62 -13.85 -11.48

Debt 200.00 8.30 8.65 9.01 9.38

FCFE (244.7) 213.72 231.74 232.59 216.88 250.62 270.31 290.78 311.97 6,022.92

Like FCFF, we are assuming that this is when the company will raise more money and move
towards stable growth rate. This process will take another 4 years. The stable growth rate is
assumed to 7%, which is risk free rate of return. The FCFE has grown significantly but has a
reduced terminal value as compared to FCFF as debt repayments are done before spreading
these payments.
Value of Equity 2063.86

No of Shares 177.01

Value per share 11.66

The value per share is 11.66 which is close to the estimated value per share of 12.9 using FCFF
method.
Trade Call
After doing the valuation as per Relative Valuation, Free Cash Flow to Firm Valuation and Free
Cash Flow to Equity we can make a call whether we want to buy the share or sell the share.

As per our Valuation, we should Buy the share and the reasons for buying the share are:
a. Morning Star Formation: Since a morning star is being formed around March 31, 2023. It
indicates that buyers are going to enter the market and hence we should buy the share. The
investment horizon for that will be 3-5 days.
Buy Price- Rs 13.15
Target Price- Rs. 14.5
Stop Loss- Rs. 12.85

b. As per 31 March 2023, the stock is trading at 52 weeks low, thus is expected to be on a rise
in the long time with the expansion plans of the company.
Investment Horizon- 1 to 2 years
Buy Price- Rs 13.15
Stop Loss- Rs. 10.30
c. Bullish Divergence as per Chaikin Oscillator: Hathway Cable and Datacom Ltd, shows a
bullish divergence according to Chaikin Oscillator (which is an advanced version of
Moving Average Convergence Divergence and captures volume-based trends). This means
that the stock has fallen lower than the fall in volumes and will undergo correction i.e.
increase. We confirm this prediction by analysing the RSI (Relative Strength Index)
Indicator, which is also oscillating in lower ranges of 30-32. This means that the stock is
oversold and therefore posits a good chance of an increase to meet stability.
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• https://www.hindustantimes.com
• https://www.focus-economics.com/country-
indicator/thailand/unemployment/#:~:text=Unemployment%20in%20Thailand,rate%20in
%202022%20was%201.3%25
• https://www.investindia.gov.in/sector/telecom
• https://www.hathway.com/
• https://www.imf.org/en/Data
• https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?end=2022&start=2022&view=b
ar
• https://markets.ft.com/ data/equities/tearsheet/summary?s=HATHWAY:NSI
• https://www.investindia.gov.in/team-india-blogs/opportunities-indian-telecommunication-
sector#:~:text=The%20telecom%20industry%20is%20one,85%2C356%20Cr%20(%2411
.38%20Bn).
• https://www.investindia.gov.in/team-india-blogs/telecom-industry-india-crosses-
milestone
• https://www.deccanherald.com/business/economy/5g-to-boost-telecoms-share-in-gdp-
create-22-crore-jobs-by-2025-2746960
• https://www.cci.gov.in/images/marketstudie/en/market-study-on-the-telecom-sector-in-
india1652267616.pdf
• https://economictimes.indiatimes.com/industry/telecom/telecom-policy/vision-2047-
indias-plans-for-the-telecom-sector/articleshow/107438217.cms?from=mdr
• https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2013602
• https://www.gminsights.com/industry-analysis/broadcasting-and-cable-tv-market
WORK ALLOCATION

Work Allocation Sheet

Division: E
Group Number: 6
Industry: Telecommunications Industry
Companies: Hathway Cable & Datacom Ltd

Sr. Name of the Roll Photograph of the Detailed description of work done
Student Number student
No.
1. Aayush Parakh E001 Industry Analysis -
Identification of key industry assessment
parameters and their future with the impact
on the company.
(a. and b. Part)
Assets forecasting, Ratios and analysis, PPT

2. Hrishitaa Shah E021 Company Analysis –

Product portfolio, geographical segments,
Customer profile, Company Moat, Key
contracts, key plant locations, logistics and
Corporate Governance Evaluation. (‘a’
Part), Income statement forecasting, Fcfe,
PPT
3. Madhav Gupta E028 Economic Analysis –
Identification of key dealing countries
Identification of foreign parameters and
forecasting of GDP and other key drivers of
the economy.
Effect of individual foreign nations on the
company’s future performance.
Equities and liabilities forecasting,
calculation of Kd and Ke, Trade Call, PPT
4. Mishka Jain E031 Economic Analysis –
Identification of Indian parameters and
forecasting of GDP and other key drivers of
the economy.
Financial impact of economic forecasts of
India and the other dealing countries on the
company.
Income statement forecasting, Relative
Valuation, Trade Call, PPT
5. Shivansh Bansal E045 Company Analysis –
Identification of which all financials affect
the company and by how much will the
company forecasts affect. (‘b’ Part)
Financial model for Balance sheet and
P&L, FCFF, PPT

6. Aditya Agrawal E058 Industry Analysis –

Identification and forecast of effect on
company’s financials based on industry
forecasts. (‘c’ part)
Financial model for P&L and Cash Flow,
Calculation of WACC, PPT.