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Route Mobile is launching an IPO of around Rs 600 crore (1,71,42,856 equity shares of Rs10 each). IPO comprises of:
Incorporated in the year 2004, Route Mobiles provide cloud communication platform over the top players and mobile network operators (MON). It has presence in Africa, Asia Pacific, Europe, Middle East and North America.Route Mobile has made inorganic growth by acquiring:
The clients are world’s largest and well-known organisations, including a number of Fortune Global 500 companies. As of June 30 2020, RM had 30150 clients, 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 Business Verticals:
Total revenue from operations for FY20 has increased by 13.6% to Rs 968.1 crore (Rs 852.38 crore in FY19). 80% of the revenues come from foreign billings. EBITDA margins have remained consistent since the last three years and they have been 11.53% in FY20 and 12.58% in Q1FY21 respectively. PAT has shown an increase of 19% for FY20 and has increased to Rs26.5 crore. Route Mobiles posted PAT of Rs 26.50 crore for Q1FY21. Net Profit margin is strong at 7.73% in FY20 and 8.49% for Q1FY21.
Route mobile has healthy cash generated from operating activities of Rs 93.44 crore and Rs 28.46 crore in FY20 and FY19 respectively. RoNW is 8.92% in Q1FY21 and 27.68% in FY20.
Purchase of messaging services is the largest expense; as a percentage of total revenue, expenses relating to purchases of messaging services were 66.88%, 78.25%, 78.93% and 79.87% in FY2018, 2019 and 2020 and in the three months ended June 30, 2020, respectively.
Title | Q1FY21 | FY2020 | FY2019 | FY2018 |
Total Revenue | 312.30 | 968.10 | 852.38 | 509.49 |
PAT | 26.50 | 74.84 | 58.75 | 49.49 |
EBITDA | 39.30 | 111.67 | 99.96 | 80.14 |
Total Accets | 634.83 | 626.55 | 505.78 | 447.37 |
Cash and cash equivalents | 158.69 | 102.64 | 95.65 | 102.59 |
CFO | 81.13 | 93.44 | 28.46 | 32.18 |
Gross profit margin(%) | 12.58 | 11.53 | 11.73 | 15.73 |
Net profit margin(%) | 8.49 | 7.73 | 6.89 | 9.71 |
Route Mobile is the company with cloud communication offerings and has no listed peers in India. The cloud communication platform is needed in every organization to maintain its business operations. Cloud communications platforms are changing ideas about how businesses can communicate with customers, end users, and subscribers and thus has a promising future.
The issue is priced at a P/BV of 5.89 based on its NAV of Rs 59.40 as on June 30, 2020; Issue appears to be reasonably priced. Hence looking at its future business prospects and consistent financial performance, investors shall subscribe this IPO.
Review By CA Priyanka Choudhary on 5th Sep 2020
About CA Priyanka Choudhary
Priyanka Choudhary Jain is a Chartered Accountant and an experienced credit analyst. She has worked with CRISIL as Senior Credit Analyst on ratings assignments including business and financial analysis in Corporates as well as the Public Finance Sector.
Email: [email protected]
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