Started in 2000, Atria Convergence Technologies Limited is Bengaluru - Karnataka based third largest wired broadband internet service provider in India with a market share of 6.9% of the pan-India wired broadband internet market as at September 30, 2017 according to MPA. As at December 31, 2017, company operated in 12 cities and towns across Tamil Nadu, Andhra Pradesh and Telangana, Delhi and Karnataka, which represent four of India's five largest wired broadband markets in terms of number of internet users, and were the market leader in Bengaluru and Hyderabad according to MPA. Company had approximately 1.28 million wired broadband internet customers as at December 31, 2017. Company is also an established provider of cable TV services in India. As at December 31, 2017, its cable TV services were available to consumers in the cities of Bengaluru, Vijayawada, Visakhapatnam and Eluru with approximately 0.71 million cable TV customers. ACTL's fibre broadband network is covering more than 5.4 million residential homes in the markets in which it operated as at September 30, 2017 according to MPA. Company has invested significantly to develop its fibre broadband network, the majority of which utilizes an advanced Metro Ethernet Active FTTX technology that enables them to provide reliable and high-speed access to the wired broadband internet services to consumers covered by the network. Company also utilize GPON technology in certain parts of the network. As at September 30, 2017, company had approximately 1.25 million wired broadband internet customers, representing a customer penetration rate of approximately 23.14% of the residential homes covered by its broadband network. Company's revenue from the wired broadband internet service business accounted for 82.77%, 90.31%, 91.61% and 91.38% of the total income for fiscals 2015, 2016 and 2017 and the six months ended September 30, 2017, respectively, and revenue from its cable TV service business accounted for 11.86%, 6.13%, 4.61% and 5.21% of its total income from operations for fiscals 2015, 2016 and 2017 and the six months ended September 30, 2017, respectively. As at December 31, 2017, we had approximately 1.28 million wired broadband internet customers, with approximately 38% of its wired broadband internet customers subscribing to the services on fixed term contracts of durations longer than one month, and approximately 0.71 million cable TV customers. Company's average monthly ARPU from its retail wired broad band internet business was Rs 684, Rs 756 and Rs 813 in fiscals 2015, 2016 and 2017, respectively. To support the fibre broadband network, as at December 31, 2017, ACTL had seven data centres in Bengaluru, Chennai, Coimbatore, Delhi, Hyderabad, Vijayawada and Visakhapatnam. From these data centres, its dedicated operations teams are able to oversee, operate and maintain the fibre broadband network and ensure the reliability of the services. In addition, company has developed a disaster recovery data centre in Chennai and they intend to develop two additional disaster recovery data centres in Hyderabad and Bengaluru over the next two years to further enhance the reliability of the services. As per financial performance, ICFL has posted total income/net profits of Rs. 396.91 cr. / Rs. 112.13 cr. (FY14), Rs. 528.06 cr. / Rs. 149.04 cr. (FY15), Rs. 644.05 cr. / Rs. 191.64 cr. (FY16) and Rs. 719.92 cr. / Rs. 210.80 cr. (FY17). For upto Q3 of FY18, it has reported net profit of Rs. 164.08 cr. on total revenue of Rs. 585.95 cr. So company has posted consistent growth over last couple of years. ICFL has posted an average EPS of Rs. 25.53 and average RoNW of 11.62% for last three fiscals. Issue is priced at a P/BV of 2.17 as per NAV of 263.96 on 31.12.17. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 24. As per RHP, industry average P/E ratio is 28.66 and listed peers comparison shown in above table. So issue looks fully priced. On BRLM's front, five merchant bankers associated with this issue and have handled 58 public issues in the past three years. When we take recent 10 IPOs of each BRLM then out of those 6 issues opened below their offer price and 4 opened at par on listing dates. As per financials, company's growth is consistent and very good, RoNW is 11.62% for last three fiscals and issue is priced at P/E of around 24 as per latest earnings. Company is an NBFC with principal lines of business, namely corporate lending, SME lending, vehicle financing and housing financing. Last two business segments (Vehicle Finance & Housing Finance) are started in recent past and it may give further boost to company's growth, but increasing bond yields and FD rates may put pressure on margins. So we give "SUBSCRIBE FOR LONG TERM" rating to this IPO.
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