The Rs 600-crore initial public offering of Route Mobile has received an overwhelming response from investors so far. Today (September 11) is the final day of bidding.
The public issue has been subscribed 73.3 times so far, as bids for 89.23 crore equity shares have been received against IPO size of 1.2 crore shares (excluding anchor book portion), the data available on exchanges showed.
The portion set aside for qualified institutional investors been subscribed 89.76 times. Portion for non-institutional investors has been subscribed 192.8 times, while the reserved portion of retail investors was subscribed 12.66 times.
The public issue consists of a fresh issue of Rs 240 crore and an offer for sale of Rs 360 crore by promoters Sandipkumar Gupta and Rajdipkumar Gupta.
Route Mobile has already raised Rs 180 crore from anchor investors at Rs 350 per share, the higher end of the price band of Rs 345-350 per share.
"At the price band of Rs 345-350, the Route Mobile issue comes priced at a PE of 18.2x-18.5x annualised Q1 FY21 EPS. This appears to be reasonable, given the healthy growth witnessed by the firm, its strong client relationship across the board," KR Choksey said.
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Given the impressive performance in Q1 FY21, the brokerage believes there is a high probability of the company continuing to record impressive growth. Hence, it recommended subscribing to the issue fo healthy listing gains.
Route Mobile provides cloud-communication platform as a service to enterprises, over-the-top (OTT) players and mobile network operators (MNOs). Its range of enterprise communication services includes application-to-peer (A2P)/peer-to-application (P2A)/2-Way Messaging, RCS, OTT business messaging, voice, email, and omni-channel communication.
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As of June 2020, the company 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.
Route Mobile had a direct relationship with close to 250 MNOs and provided its enterprise clients with access to over 800 mobile networks. Geography-wise, the company had a direct relationship with 161 MNOs in Europe, the Middle East and Africa, 32 MNOs in the Asia-Pacific region, 48 MNOs in North America and South America, 6 MNOs in India and 1 MNOs in Australia, as of June 2020.
Route Mobile earns more than 80 percent of revenues from international clients and although it involves hedging costs and associated risks, so far Route Mobile has managed well said experts.
"Continuous development of omni-channel digital communication offerings and innovative solutions, focus on developer community program, service offerings through inorganic opportunities and growing presence in additional markets to serve clients locally augurs well with the company going ahead," said Ashika Institutional Equities.
On the financial performance front, revenue grew at a CAGR of 37.6 percent in the last three fiscals, while EBITDA grew at 14.9 percent and net profit grew at 21.7 percent in the same time. EBITDA margin was 10.4 percent in FY20 and 12.1 percent in Q1 FY21 respectively. Net Profit margin is strong at 7.2 percent in FY20 and 8.7 percent for Q1 FY21. RoNW is 13.6 pecent in FY20 (post-dilution).
"The company has no listed peers in India. So, the company will have a first-mover advantage in the segment. Overall, the company has a history of stable financials, strong return ratios and positive operating cashflows," said Ashika Institutional Equities.
Route Mobile is going to use the net fresh issue proceeds for repayment or prepayment of certain borrowings, acquisitions and other strategic initiatives, purchase of office premises in Mumbai and general corporate purposes.