Route Mobile IPO Opens For Subscription. Here's What Brokerages Have To Say
The initial public offer (IPO) of Route Mobile, a cloud communications platform service provider, opens for subscription on Wednesday i.e. September 9, 2020. The Rs 600 crore public issue will be open for three trading days till September 11. Route Mobile has fixed the price band at Rs 345-350 per share.
The public offering will comprise fresh issue of up to Rs 240 crore and offer for sale (OFS) of Rs 360 crore. A retail investor can bid for a minimum one lot, of 40 shares, and in multiples of 40 shares thereafter to a maximum of 14 lots. The shares will be listed on both the stock exchanges, BSE and the NSE.
Route Mobile raised Rs 180 crore from anchor investors, including Franklin Templeton Mutual Fund, Goldman Sachs, SBI Life Insurance, Kuwait Investment Authority and Axis Mutual Fund, ahead of the IPO.
Route Mobile plans to utilise the proceeds of the fresh issue to repay existing debt, make acquisitions, purchase office premises in Mumbai and for general corporate purposes.
The book running lead managers of the issue are ICICI Securities, Axis Capital, Edelweiss Financial Services and IDBI Capital Markets & Securities.
Sandipkumar Gupta and Rajdipkumar Gupta established Route Mobile in 2004. The company has clients in Africa, Asia Pacific, Middle East, Europe and North America.
Route Mobile IPO is the fourth public offering this year, following the SBI Cards and Payment Services' share offering in March, Rossari Biotech's share sale in July and Happiest Minds IPO, which will be closed for subscription on Wednesday evening. The Route Mobile IPO comes as India continues to battle with the Covid19, with daily case count mounting to 90,000.
What Brokerages Say
Motilal Oswal Financial Services
At the higher end of the price band, the issue is valued at 29x FY20 P/E (fully diluted), which is comparable to mid-sized IT firms (no listed peers available). We recommend Subscribe to the IPO given RML's strong presence in niche CPaaS market with high entry barrier and healthy financials. Further given the small offer size and presence in niche IT space, one may get listing gains too.
HDFC Securities
Route Mobile has continuously focused on retaining and deepening relationships with its existing customer base with the help of a dedicated key accounts management team. It has grown its revenues with respect to particular customers and intends to focus on revenue expansion through cross-selling and up-selling a wider range of services and solutions to its existing customers. Its R&D team has augmented its CPaaS platform with several new channels of digital communication, which will drive growth in the near term.
