Hathway Cable & Datacom Downgraded to Strong Sell Amid Weak Technicals and Financials

Technical Indicators Signal Increased Bearishness

The primary catalyst for the downgrade lies in the shift of Hathway Cable’s technical grade from mildly bearish to outright bearish. Key momentum indicators such as the Moving Average Convergence Divergence (MACD) on both weekly and monthly charts have turned decisively bearish, underscoring sustained downward pressure on the stock price. Similarly, Bollinger Bands on weekly and monthly timeframes confirm this negative momentum, with the price consistently hugging the lower band, indicating persistent selling interest.

Other technical tools reinforce this outlook: the daily moving averages are trending downwards, the Know Sure Thing (KST) oscillator remains bearish on weekly and monthly scales, and Dow Theory analysis shows a mildly bearish trend weekly, with no clear trend monthly. Although the On-Balance Volume (OBV) indicator shows a mildly bullish signal monthly, it is insufficient to offset the broader negative technical picture. The Relative Strength Index (RSI) remains neutral, offering no immediate reversal signals.

These technical signals collectively suggest that the stock is under pressure, with limited near-term upside, prompting a downgrade in the technical grade and contributing significantly to the overall rating shift.

Valuation Improves but Insufficient to Offset Risks

Contrasting the technical deterioration, Hathway Cable’s valuation grade has improved from fair to attractive. The stock currently trades at a price-to-earnings (PE) ratio of 22.36, which, while not low in absolute terms, is reasonable relative to its sector peers. More notably, the price-to-book (P/B) value stands at a modest 0.50, indicating the stock is trading at half its book value, a potential bargain for value investors.

Enterprise value multiples such as EV/EBITDA and EV/EBIT are negative, reflecting the company’s current financial challenges, but the PEG ratio is zero, signalling no premium for growth expectations. Return on equity (ROE) remains low at 2.22%, highlighting limited profitability relative to shareholder funds. Despite these valuation positives, the company’s financial health and operational trends temper enthusiasm, limiting the impact of this upgrade on the overall rating.

Financial Trends Remain Weak with Declining Profitability

Hathway Cable’s financial trend continues to deteriorate, with the company reporting negative performance in the second quarter of FY25-26. The quarterly profit after tax (PAT) has fallen by 29.1% to ₹18.25 crores, while profit before tax excluding other income (PBT less OI) declined by 19.59% to ₹7.43 crores. Operating profit has contracted at an alarming annual rate of -43.82% over the past five years, signalling structural challenges in the business model.

Management efficiency metrics are also disappointing. The average return on equity (ROE) is a low 2.84%, indicating poor utilisation of shareholders’ funds to generate profits. The debtors turnover ratio for the half-year period stands at a mere 0.48 times, reflecting inefficiencies in receivables management and potential liquidity concerns. Despite the company’s sizeable market capitalisation, domestic mutual funds hold no stake, suggesting a lack of institutional confidence in the stock’s prospects.

These financial weaknesses underpin the downgrade, as the company struggles to deliver sustainable growth and profitability in a competitive media and entertainment landscape.

Long-Term Returns Significantly Underperform Benchmarks

Hathway Cable’s stock performance over multiple time horizons has been disappointing relative to the broader market. Over the past year, the stock has delivered a negative return of -21.54%, while the Sensex gained 8.65%. The underperformance extends over longer periods: a three-year return of -27.37% contrasts sharply with the Sensex’s 41.84% gain, and a five-year return of -63.20% versus a 76.66% rise in the benchmark index.

Over a decade, the stock has lost 70.74% of its value, while the Sensex has surged 241.87%. This persistent underperformance highlights the company’s inability to keep pace with market growth and raises concerns about its long-term investment appeal.

Technical and Financial Challenges Weigh on Investor Sentiment

At the current price of ₹12.42, close to its 52-week low of ₹11.56 and well below the 52-week high of ₹17.95, Hathway Cable faces significant headwinds. The stock’s daily price range remains narrow, with a high of ₹12.50 and a low of ₹12.36 on the latest trading session, reflecting subdued trading interest and limited volatility.

The combination of bearish technical indicators, weak financial trends, and poor relative returns has led to a downgrade of the company’s Mojo Score to 28.0, with the Mojo Grade slipping from Sell to Strong Sell as of 7 January 2026. This rating reflects a cautious stance for investors, signalling that the stock currently carries elevated risk and limited upside potential.

Summary and Outlook

In summary, Hathway Cable & Datacom Ltd’s recent downgrade to Strong Sell is driven by a confluence of factors. The technical landscape has worsened markedly, with multiple indicators signalling bearish momentum. While valuation metrics have improved, offering an attractive entry point on a price-to-book basis, the company’s weak financial performance, poor profitability, and sustained underperformance relative to market benchmarks overshadow this positive.

Investors should remain cautious given the company’s declining operating profits, low ROE, and lack of institutional backing. The stock’s current technical and fundamental profile suggests limited near-term recovery prospects, making it a less favourable option within the Media & Entertainment sector.

Market participants are advised to monitor developments closely, particularly any improvements in operational efficiency or shifts in technical momentum, before considering exposure to Hathway Cable.

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