Case for GTPL Hathway

What do I look for as a growth investor?

1. Sales and Profit growing at 15%+
Sales over 1,3,5 have grown at 30+%
Profits over 1,3 and 5 have grown at 40+%

Now that this condition is satisified, what is the source of growth and can it continue at 30+%?
Sources of growth:
1. Sale and seeding of Set top boxes and internet cable
2. Subscription income

No 30+% growth may not be easy given that cable TV is omnipresent and CAS conversion is
almost saturating. New subscriber additions for Cable TV is not growing at that pace.

How about internet subscribers?

Yes this is the fastest growing segment at 50+%. No it can’t grow at that pace for more than 2-3
years
Also from H2FY21 there is a plan to roll out
What would be a good expected growth rate?: 10%

2. Has the growth been profitable enough ?

Look at the 3yr and 5yr CFO. They tell us that the growth has been profitable
Also look at the debt, the way the debt has gone down
3. What about the ROE, ROCE, D/E
most of the ratios are inching up
4. What about the working capital
Receivable days have been going down. Not much inventory

Valuations
at 7.5x PE and 1.7x pbv and 3.3x Mcap/CFO it is not very expensive
Key risks:

1. Highly competitive industry

In the CATV business DTH players have been eating away Market share. But then there is still a
loyal subscriber base for CATV due to some inherent strengths. Internet attracts competition from
say ACT broadband, Airtel etc. But then JIO has invested in this business for last mile connectivity
to push its set top boxes. Hence they will not let this go down. Also inspite of the competitive
industry structure look at the OPMs which is 20+%
2. Capex

How much capex will the hybrid boxes need? This is one of the biggest concerns

3. Subsidiaries

100+ subsidiaries. The reason being there are so many local LCOs and as the keep losing their edge,
keep getting acquired by a stronger and bigger MSO. And each of those acquired LCOs are shown
as subsidiaries

How long I would like to stay invested?

1. As long as growth continues at 15+%

2. Debt keeps going down
3. WC doesnt deteriorate
4. Share price doesnt fall below 90