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Route Mobile IPO trades at about 45% premium in grey market ahead of listing

The Rs 600-crore public issue witnessed strong subscription of 73.3 times during September 9-11.

September 14, 2020 / 11:51 AM IST

Route Mobile, which provides cloud-communication platform as a service to enterprises, has been trading at a strong premium over its expected issue price in the grey market ahead of its listing on bourses.

The final issue price is likely to be fixed at the higher end of the price band of Rs 345-350 per share and the listing of shares is expected around September 21.

Route Mobile share price was trading at a premium of Rs 160-190 per share over the expected final issue price of Rs 350 per share in the grey market, citing stellar response to the IPO, sources familiar with the development told Moneycontrol.

The Rs 600-crore public issue witnessed strong subscription of 73.3 times during September 9-11 as the portion set aside for qualified institutional investors was subscribed 89.76 times, non-institutional investors 192.8 times and that of retail investors 12.66 times on final day.

"As expected, Route Mobile received an overwhelming response from all the category of investors. We are positive on the future outlook for the industry as well as the company. We expect good listing," Keshav Lahoti- Associate Equity Analyst at Angel Broking told Moneycontrol.

The IPO comprises 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 will utilise fresh issue proceeds for repayment of certain loans, acquisitions and other strategic initiatives, purchase of office premises in the Mumbai region and general corporate purposes.

Company 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.

With growing internet penetration, business models are evolving and cloud communication services are being used by enterprises for streamlining back-end operations as well as for engaging with customers and employees. Company has already evolved itself with number of acquisitions; management believes it would further continue to evaluate inorganic growth opportunities to diversify service offerings and geographic presence.

Company says it does not have any listed peers. However, analysts feel Tanla solutions & Tata communications could be close peers amongst listed entities.

Given the company’s diversified clients scalable business model, strategic acquisitions (to deepen relationship with MNOs and broaden product and service portfolio) and rising investments in digital business & work from home is now in culture, Manali Bhatia of Rudra Shares feels in the challenging environment company’s business would not be impacted.

Having sound fundamentals it has significantly performed well, she said. In terms of the CAGR, revenue from operations increased at a CAGR of 37.61 percent. Company commands impressive return on net worth (RoNW) at 25.58 percent and has a positive operating cash flow over FY18-20.

first published: Sep 12, 2020 01:14 pm