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The initial public offer (IPO) of Route Mobile, a cloud communications service provider, opens for public subscription today i.e. September 9 (till Sept 11).
(If you wish to know 'How to apply for an IPO, Read here)
Here are 10 key things that you should know before you subscribe.
Incorporated in 2004, Route Mobile Limited is among the leading Communications Platform as a Service (CPaaS) provider and a tier-one application-to-peer (A2P) service provider. Its enterprise communication services include new age solutions in Messaging, Voice, Email, and SMS Filtering, Analytics & Monetization. It helps clients in their digital strategy by enabling multiple channels of communication to deliver messages to customers, suppliers, and employees.
2) Business segmentation:
The company has three major revenue sources:
- Enterprise: The Company provides a cloud-communication platform as a service to enterprises, over-the-top players, and mobile network operators around the world.
- Mobile Operator: Services in this segment include SMS analytics, firewall, filtering, monetization, and hubbing solutions.
- Business Process Outsourcing (BPO): The Company provides a range of BPO services including client support, technical support, booking, and collection services.
318 Employees | 18 locations across Africa, Asia Pacific, Europe, the Middle East, and North America | Served 30150+ clients globally | 2.5+ Billion Messages per month in fiscal 2020 | 31+ Billion Billable transactions in fiscal 2020 | 800+ Network Operators | 240+ Direct Connections or "Super Networks" | 6 Strategically Located Data Centers | 4 Short Message Service Centers
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.
Its clients include some of the world’s largest organisations.
4) Issue details & Valuations:
IPO Date: Sep 9, 2020 - Sep 11, 2020
Issue Size: 17,391,303 Eq Shares of ₹10
Face Value: ₹10 per equity share
IPO Price₹: 345 to ₹350 per equity share
Market Lot: 40 Shares
Listing At: BSE, NSE
Finalisation of Basis of Allotment: Sep 16, 2020
Initiation of Refunds: Sep 17, 2020
Credit of Shares to Demat Acct: Sep 18, 2020
IPO Shares Listing Date: Sep 21, 2020
5) Offering details:
Company plans to raise Rs 600 crore by selling up to 1.71 crore shares at Rs 345-350 apiece. The offer consists of a fresh issue and a sale of stake (offer-for-sale) by promoters Sandipkumar Gupta and Rajdipkumar Gupta (180 Cr each).
Over FY18-20, Route Mobile’s topline grew at 38% CAGR to Rs 956.3 crore in FY20 while profit after tax (PAT) increased at a CAGR of 22% to Rs 69.1 crore. EBITDA rose at 15% CAGR. Average Return on Equity (RoE) for the period stood at 29% and Return on Capital Employed (RoCE) at 24%.
7) Objects of the Issue:
The company proposes to utilise the Net Proceeds towards funding the following objects:
1. Repayment or pre-payment, in full or part, of certain borrowings of our Company;
2. Acquisitions and other strategic initiatives;
3. Purchase of office premises in Mumbai; and
4. General corporate purposes.
8) Grey Market premium:
Route Mobile commands a grey market premium of 63%, or Rs 220 apiece, over the proposed issue price of ₹345-350 per share.
- The company's clients include some of the world's largest organizations, including several Fortune Global 500 companies.
- In FY2020 the Company has only 3.7 Crore debt.
- The company has no listed peer in India. The closest competitor is Tanla Solutions Ltd.
- Top 10 clients contribute alomost 64% of total revenue. The top client contributing 15.45% to FY20 revenues.
- Since 81% of the revenue comes from exports so there is Forex fluctuations risk where revenue can be depreciated on major fluctuations.
- The company has few reputed unlisted competitors like Kaleyra, Twilio, Commbox, Haptik (acquired by Reliance Industries).
- Economic slowdown due to Covid-19.
- Due to intense competition, company's profit growth has been negative since last 4 years.
Suggestion: Apply for only 'one lot' and Subscribe this issue for listing gains as well as for long term investment. To increase the chances of getting this IPO, apply for multiple demat account (from your family members).
Open demat account in a day here (Upstox)
Research Analyst (SEBI Regd.)
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