Route Mobile to open IPO on Sept 9 in the Price Band of Rs. 345-350 per equity share. The Cloud communications service provider, Route Mobile IPO comprises a fresh issue of shares worth Rs 240 crore and a secondary market sale of shares worth Rs 360 crore by the promoter Sandipkumar Gupta and Rajdipkumar Gupta. The Route Mobile IPO and listing will make Route Mobile the first company in the mobile communication services segment to go public.
Related Posts: Route Mobile IPO: Consolidated Brokerage Views
Route Mobile IPO Details
| Issue Details | |
| Issue Period | 09 Sept – 11 sept 2020 |
| Anchor Investors | 08-09-2020 |
| Issue Details | Fresh Issue upto ₹ 240 Cr |
| + Offer for Sale upto ₹ 360 Cr | |
| Issue Size (Rs. Cr) | ₹ 600 Cr |
| Price Band | ₹ 345 – 350 |
| Bid Lot | 40 Shares and in multiples |
| Issue Structure : | |
| QIB | 50% of the offer |
| NIB | 15% of the offer |
| Retail | 35% of the offer, ~ 60 Lac Shares , ₹ 210 Cr |
| Appls for 1X Retail | 150000 |
| BRLMs | Axis Capital, ICICI Securities, Edelweiss Financial, IDBI Capital |
| Registrar | KFIN Technologies Pvt. Ltd.. |
Updates
- ANCHOR ISSUE: See related Post Route Mobile IPO: Consolidated Brokerage Views
About Route Mobile
- Established 2004 in Mumbai, RML has offices in Bangalore, Hyderabad, New Delhi, Accra, Bangkok, Dubai, Jakarta, London, Lagos, and Singapore.
- Route Mobile Limited (RML) is a global provider of communication services delivered via mobile phones that enable enterprises to create better customer experiences.
- Providing enterprises, aggregators, resellers and mobile network operators (MNOs) worldwide with tailored mobile technology solutions RML simplifies communications and helps customers bring their messages to life.
- Through its portfolio of comprehensive, flexible & innovative solutions including Mobile Messaging, Two Way Messaging, HLR Number Lookup, SMS Firewall, SMS Hubbing, Voice and Interactive Voice Response (IVR). Route Mobile meets and exceeds its customer’s requirements.
- Company’s operations are internally aligned into the following business verticals:
- Enterprise: Provides cloud based communication platform to enterprises to enable digital communication through multiple channels.
- Mobile Operator: offerings in this segment include SMS analytics, firewall, filtering, monetization and CPaaS and hubbing solutions.
- Business Process Outsourcing: provides a range of BPO services including client support, technical support, booking and collection services.
- Its Enterprise solution consists 2 primary components – the front-end that provides an interface for enterprises to integrate with, and a back-end which is directly integrated with over 240 MNOs (Mobile Nework operators), and provides access to over 800 MNOs across the globe.
- As of June 30, 2020, Route Mobile has serviced over 30,150 clients, cumulatively since inception, across sectors including social media, banking and financial services, aviation, retail, internet/e-commerce, logistics, healthcare, hospitality, media and entertainment, pharmaceuticals and telecom.
- RML routes more than 2 billion messages per month.
What is CPaaS?
CPaaS stands for Communication Platforms as a Service and is a cloud based solution that allows businesses to upgrade their communication channels. CPaaS facilitates the business to add a variety of valuable features to the existing communication stack, including voice, video, and SMS. While many times, CPaaS solutions are embedded through APIs (Application Program Interfaces), some some vendors also offer a comprehensive pre-built CPaaS system tailored to needs of a company. that’s designed for a company’s individual needs. CPaaS is rapidly gaining foothold as demand for flexible solutions is growing.
Route Mobile: Financials
| Particulars/ Rs in cr. | 2020 (03) | 2020 (12) | 2019 (12) | 2018 (12) |
| Revenue from Operations | 309.61 | 956.25 | 844.67 | 504.95 |
| Revenue Growth (%) | – | 13.21% | 67.28% | – |
| EBITDA | 40.3 | 111.67 | 99.96 | 80.14 |
| EBITDA (%) | 12.90% | 11.53% | 11.73% | 15.73% |
| Profit Before Tax | 32.29 | 84.12 | 65 | 56.49 |
| Net Profit | 26.93 | 69.1 | 54.53 | 46.68 |
| Net Profit Margin | 8.70% | 7.23% | 6.46% | 9.24% |
| Equity Share Capital | 50 | 50 | 50 | 50 |
| Reserves | 247.02 | 220.37 | 161.78 | 110.85 |
| Net worth | 297.02 | 270.37 | 211.78 | 160.85 |
| Long Term Borrowings | 3.7 | 3.71 | 3.95 | 3.57 |
| Short Term Borrowings | 38.82 | 37.36 | 73.16 | 77.77 |
| EPS (₹ ) | 5.42 | 13.83 | 11.19 | 9.57 |
| RONW (%) | 9.12% | 25.58% | 26.42% | 29.74% |
| NAV (₹ ) | 59.4 | 54.07 | 42.36 | 32.17 |
| FV | 10 | |||
| EPS (₹ ) | 13.42 | |||
| Equity Post IPO | 56.86 | |||
| IPO Price | 350 | |||
| EPS (Post Issue) FY20 | 12.15 | |||
| PE FY20 | 28.80 | |||
| EPS annualized Q1FY21 | 18.95 | |||
| PE Post IPO annualized | 18.47 | |||
| P/BV | 5.89 | |||
| Market Cap | 1990 | |||
| Mcap/Sales | 2.08 |
Pros
- Omni-channel cloud communication platform service provider with diversified service offerings for enterprises;
- MNO (Mobile Nework operators) focused suite of products;
- Global connectivity through established relationships with MNOs;Diversified and global client base across industries serviced locally;
- Scalable delivery platform supported by robust infrastructure;
- Robust business model and consistent financial track record; and
- Experienced Promoters and senior management team.
- As of June 30, 2020, compnay had operations in 18 locations across four continents.
- Route Mobile has been expanding its gobal presence and/or product offering inorganically through acquisition
- of companies that complement its competencies. These include
- 365squared Limited , Malta, in 2017
- Call 2 Connect India Private Limited, India, in 2017
- Start Corp India Private Limited, India, in 2016
- Cellent Tech, India, in 2016
Cons
- The company operates in a highly evolving market and any inability to respond to such changing conditions couldadversely affect our business and results of operations.
- Company and Subsidiaries are involved in certain legal and other proceedings. Any adverse outcome in any of these proceedings may adversely affect the financial condition and results of operations
- Risk from potential claims resulting from client’s misuse of our platform to send unauthorized text messages in violation of TRAI regulations.
- Promoters Track record in terms of corporate Governance is not known.
- Foreign exchange risks
Route Mobile IPO: Assessment
- The company had filed its IPO plan in Januaary 2018 and received a green signal in August 2018 but shelved the plan for IPO due to unfavourable market conditions. It filed the draft prospectus again last year.
- Cloud communication is an entirely new way to build, deploy, and scale enterprise communications systems.
- It offers enterprises cost-effective communications solutions that combine voice, messagingand data communication services over networks of telecom operators or MNOs. As per Juniper Reports, there are expected to be 7.72 billion mobile subscribers globally at the end of 2017, that are projected to grow at a CAGR of 2.5% to 8.74 billion by 2022.
- Market for CPaaS is set to reach a value of $10.9 billion by 2022, and the number is expected to grow going forward.
- Route Mobile has experienced rapid and significant growth in its operations and revenue in recent years
- As of June 30, 2020, Route Mobile had operations in 18 locations across four continents which an indiocation of prowess pf the compan y in gthis field.
- Its revenue from operations increased at a CAGR of 37.61% from ₹ 5,049.48 million in Fiscal 2018 to ₹ 9,562.52 million in Fiscal 2020 and was ₹ 3,096.14 million in the three months ended June 30, 2020.
- The growth in the revenues was in large part due to strategic acquisitions in the recent past. In addition, Route Mobile has been expanding its international operations, and established operations in 10 new countries since April 1, 2016.
- Route Mobile has gone for acquisitions in recent past with a view to enhance its geographical presence, expand its product lines, and delivery capabilities across a broader domain and enhance its position as a specialized player in the cloud-based communication service industry. For example, in September 2017, it acquired 100 percent stake in 365squared Limited, a company incorporated under the laws of Malta, which operates in SMS filtering, analytics and monetization
- Route Mobile has no comparable peers.
- Route Mobile had a positive operating cash flow over the period FY18-20,
- Route Mobile has a scalable business and could continue to grow at a decent rate.
- On the Post issue equity, P/E works out to be ~ 29 based on Fy20 results and is even better if we consider Q1FY21 results. The demanded P/E valuation looks attractive for a company engaged in mobile communication services and has a first mover advantage.
- Route Mobile seems to have beniffited from increased digitilsation and use of communication devices followng the COVID19 pandemic.
- I intend to apply in Route Mobile IPO and chances of allotment are somewhat better than Happiest Minds IPO due to relatively moderate issue size though heavy demand for Happiest Minds IPO indicate that many new investors have joined in.
- As on 07-09-20, Route Mobile IPO was commanding a Grey market Premium (GMP) of Rs. 170. There can be variation in these rates from day to day.
- Do check this page for any last minute updates
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.