Route Mobile’s Rs 600-crore IPO fully subscribed on day 1

The IPO, which is being sold at Rs 345-Rs 350 per share, is seeking a valuation of 29 times PE on FY20 basis (fully diluted). Analysts are positive on the issue and believe the IPO can offer listing pop as well as long-term gains.

Motilal Oswal Securities said that the issue is valued at 29 times FY20 P/E, which is comparable to mid-sized IT firms.
The Rs 600 crore IPO by Route Mobile was fully subscribed on Day 1 of the bidding process on Wednesday.
As per data available with NSE, the issue received bids for 1,22,31,600 shares, compared to the total issue size of 1,21,73,912 shares. This is even as the broader market sentiment remained weak, with the BSE Sensex falling 171 points to 38,194 in the day.

The IPO, which is being sold at Rs 345-Rs 350 per share, is seeking a valuation of 29 times PE on FY20 basis (fully diluted). Analysts are positive on the issue and believe the IPO can offer listing pop as well as long-term gains.
The company has no listed peers. The proxy peers, which have small presence in services offered by Route Mobile, are Tanla Solutions and Tata Communications.


Angel Broking said the company management has till now infused only Rs 6 lakh capital in the company, and it will command a market cap of Rs 1,990 crore at the higher price band.

"This shows that it is a scalable business model, which can grow without capital infusion. Unlike many other businesses, Covid-19 has led to better growth prospects for the company given increased adoption of digital technologies," the brokerage said.

The brokerage finds the valuations quite reasonable, considering the future prospects of the company. "As we are positive on the future outlook for the industry as well as the company, we would recommend to “Subscribe” to the issue for long term as well as for listing gains," it said.
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Motilal Oswal Securities said that the issue is valued at 29 times FY20 P/E, which is comparable to mid-sized IT firms. It has recommended 'Subscribe' to the IPO given the company's strong presence in the niche CPaaS market with high entry barriers and healthy financials. "Given the small offer size and presence in niche IT space, one may get listing gains too," the brokerage said.
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