Route Mobile IPO: Everything you must know before hitting 'subcribe'

IPO detailsiStock
IPO details
The Rs 600 crore Route Mobile initial public offer (IPO) is all set to hit the primary market on Wednesday. The omnichannel cloud communication service provider has fixed the price band for the issue at Rs 345-Rs 350 per share. At the higher end of the price band, the company is seeking 25.3 times PE on FY20 basis.

The issue would comprise of a fresh issue of up to Rs 240 crore. In addition, existing promoters would offer shares aggregating up to Rs 360 crore in an offer for sale (OFS). This would include shares of up to Rs 180 crore by Sandipkumar Gupta and up to Rs 180 crore by Rajdipkumar Gupta.

Investors could bid for a minimum bid lot of 40 shares and in multiples of 40 shares, thereafter. The issue will close on September 11, Friday.

Here is what you need to know about the issue:
What does the company doAgencies
What does the company do
Incorporated in 2004, the Mumbai-headquartered company carries on mainly three operations: Enterprise, mobile operator and business process outsourcing. The enterprise vertical primarily provides cloud-based communication platform to enterprises. The mobile operations include services such as SMS analytics, firewall, filtering, monetisation and CPaaS (cloud-communication platform as a service) and hubbing solutions. In April 2017, the company acquired a BPO Call2Connect, through which the company integrates the BPO capabilities with its enterprise voice platform. Over 80 per cent of the revenues that the company generates is in foreign currency. According to the ROCCO Report 2020, the company was ranked as a tier I application-to-peer service provider internationally.
Customer BaseAgencies
Customer Base
As of June 30, the company had served more than 30,150 clients since its inception. The company has direct relationships with over 240 mobile network operators (MNOs). It provides its enterprise clients from Africa, Asia Pacific, Europe, Middle East and North America access to over 800 mobile networks. Top 10 clients account for about 64 per cent of the company's revenues, with the top client contributing 15.45 per cent to FY20 revenues.
Route Mobile, which has six strategically-located data centres, said its profit stood at Rs 79.60 crore in FY20 against Rs 74.8 crore in FY19 and Rs 58.10 crore in FY18. Return on equity (RoE) stood at 30 per cent for FY20 against 36 per cent each in FY19 and FY18. In terms of PAT margins, the company reported a margin of 8 per cent in FY20, down from 9 per cent in FY19 and 11 per cent in FY18.
In FY20, the company's platform managed more than 30.31 billion billable transactions from its clients and was used by more than 2,700 clients. It managed 24.74 billion billable transactions in FY19. Total billable transactions for the company rose 38 per cent compounded annually, the company said in a presentation. The company has a total of 291 employees (including the ones in subsidiaries). Besides, it has 27 employees working outside India.
Covid-19 responseiStock
Covid-19 response
The company said it responded swiftly to Covid-19 by implementing various processes to ensure its operations and services to its customers continue seamlessly. It said it has maintained a robust VPN infrastructure, which has enabled and equipped its employees to work from home to ensure no service disruptions and provide support to its customers.

"This meant that almost its entire team was able to work from home from March 23, 2020 when a national lockdown came into force in India. The company has also deployed security systems to safeguard assets and customer data as well as issued detailed work from home protocols to enable secure usage," Kotak Securities said in a note.

In the three months ended June 30, the company processed more than 6.95 billion billable transactions.

The company's servers are maintained in Tier III datacenters and all components are managed remotely by authorised personnel only and through secured connections.
Analyst's takeAgencies
Analyst's take
Astha Jain of Hem Securities said the valuations for the IPO comes in at 19 times post issue on Q1FY21 EPS basis. She noted that the company has diversified service offerings for an enterprise client base across a broad range of industries including social media companies, banks, financial institutions, e-commerce entities and has strong distribution reach.

The analyst has a 'Subscribe' rating on the issue as she sees both listing and long term gains.
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