Accumulate Route Mobile; target of Rs 1695: Arihant Capital

Arihant Capital's research report on Route Mobile

The route has reported consolidated revenue of INR 5,628 Mn, +46.3% YoY/29.2% QoQ in Q2FY22 against our estimate of INR 5079 Mn. Consolidated EBITDA stood at INR 608 Mn, up by 36.4% YoY/8.4% QoQ against our estimate of INR 651 Mn. On the margins front, EBITDA margin contracted by 78bps YoY/ 207bps QoQ to 10.8% against our estimate of 12.8%, decline despite high gross due to increase in sales & marketing cost and hiring of developers. The gross Profit margin of 21.1%, 21.2%, and 18.0% in Q3 FY21-22, Q2 FY21-22, and Q3 FY20-21 respectively. Adjusted for the non ESOP charges. Consolidated PAT stood at INR 483 Mn, up by 79.5% YoY/14.7% QoQ against our estimate of INR 489 Mn. Adjusted for ESOP benefit expenses (net of tax) and non-cash amortization associated with the intangible assets added as a result of purchase price allocation for acquisitions. Interim dividend of INR 3 per share.

Outlook

We value the stock at a P/E multiple of 30 (x) to its FY24 EPS of INR 56.5 to arrive at a target price of INR 1,695 and maintain an Accumulate rating on the stock.