Route Mobile IPO subscribed 4 times on 2nd day of bidding, QIBs fully booked

Mumbai-based cloud-communication platform provider Route Mobile's maiden public offer has been subscribed 4.15 times so far on September 10, the second day of bidding.

The IPO has received bids for 5.05 crore equity shares against offer size of over 1.21 crore equity shares, the data available on the exchanges showed.

Retail investors' reserved portion got fully subscribed on the first day itself. At the time of writing this copy, it had been subscribed 6.7 times. Non-institutional investors have put in 203 percent bids against their reserved quota and the portion set aside for qualified institutional buyers has been subscribed 1.25 times.

"We expected the IPO to receive good traction as a lot is left on the table for the investors. We also expect the IPO to be subscribed manifold," Keshav Lahoti - Associate Equity Analyst at Angel Broking told Moneycontrol.

"As we are positive on the future outlook for the industry as well as the company, we have recommended subscribing to the issue for long-term as well as for listing gains," he said.

Route Mobile IPO to open on September 9: 10 key things you must know before subscribing

Through the public issue, Route Mobile aims to raise Rs 600 crore which 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.

The company will utilise the proceeds for repayment or prepayment of certain borrowings, acquisitions and other strategic initiatives, purchase of office premises in Mumbai and general corporate purposes.

Before the issue opened, Route Mobile raised Rs 180 crore from anchor investors at the higher end of the price band i.e. Rs 350 per share.

Route Mobile IPO opens today: Should you subscribe?

"At the upper price band of Rs 350, RML is available at a P/E of 28.8x and when we annualise Q1 FY21 numbers, we arrive at a P/E of 18.5x for FY21E on a post-issue basis. Given that there is no listed peer to compare, and based on stable financial performance and niche business model, we assign a subscribe rating to the IPO," Geojit Financial Services said.

Route Mobile is one of the most prominent and largest CPaaS (cloud communication platform as a service) players in the world, leading in Asia, Africa and the Middle East.

It provides services to enterprises, over-the-top (OTT) players and mobile network operators (MNOs). Their range of services includes messaging, voice, email, SMS filtering, analytics and monetisation. It has over 300 employees and has served over 30,150 clients since inception. They have access to more than 800 networks across the globe, over 255 direct connections to Telecom operators and more than 3,000 active monthly billable clients.

As per ROCCO 2020 report, the company is ranked as a tier one A2P (application to peer) service provider internationally. Close to 85 percent of its revenue is generated from export markets like Africa, Europe, the Middle East and North America.

The company uses a prepaid business model where the clients pay upfront helping in reducing the overall working capital cycle. For FY18-20, its revenue grew at a CAGR of 38 percent due to its association with marquee clients while the PAT grew at 22 percent CAGR.

In Q1 FY21, Route Mobile reported a profit of Rs 27 crore on revenue of Rs 310 crore and, as per management, the company was able to manage traffic during the pandemic.