Route Mobile IPO Opens Today: Check Issue Details, Valuation & Risks; Know If You Should Subscribe To It

Route Mobile IPO Opens Today: The company aims to utilise the proceeds for repayment of certain borrowings, acquisitions and other strategic initiatives besides buying office premises in Mumbai, and meet other corporate expenses.

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Route Mobile IPO: As the IPO market has started to witness traction, Enterprise communication services provider Route Mobile has entered the fray by launching its Rs 600-crore initial public offering for subscription on September 9, with a price band at Rs 345-350 per share. Here is what you should know about the IPO and whether you should subscribe to it. What is the issue? As per the business daily Financial Express, the Rs 600-crore issue includes a fresh issue of Rs 240 crore and an Offer For Sale (OFS) of up to Rs 360 crore. Route Mobile is in the business of offering cloud-communication platforms to Over-The-Top (OTT) players and mobile network operators. It will the first company in the category of business to get listed on stock exchanges. So far, the company is promoted by Sandipkumar Gupta and Rajdipkumar Gupta, has been able to receive funding to the tune of Rs 180 crore from 15 anchor investors. The company aims to utilise the proceeds for repayment of certain borrowings, acquisitions and other strategic initiatives besides buying office premises in Mumbai and meet other corporate requirements. It has been positioned as a tier 1 application-to-peer (A2P) service provider internationally and ranked second globally as a tier 1 A2P service provider. The company had served over 30,150 clients by June 2020, cumulatively since inception globally through its offices across Africa, Asia Pacific, Europe, the Middle East and North America. The company’s revenue has grown from Rs 504 crore in the financial year 2018 to Rs 956 crore in the last fiscal year. When does the subscription close? Under the listing, Qualified Institutional Buyers (QIB) will get 20% of the shares on offer, Anchor investors get 30%, HNIs get 15% and retail investors get 35%. The issue, which will remain open till September 11 consists of a fresh issue of Rs 240 crore What should you do? The company’s EBITDA margins were consistent for the last three years and remained 10.4% in FY20 and 12.1% in Q1FY21 respectively.  Those analysts who suggest subscription to the issue are batting on company due to the diversification in service offerings with one-stop solution provider to enterprise clients and mobile network operators. In fact, the expected growth opportunity in cloud communication space, good financial performance, expected strong digital growth post-Covid-19 economy and no major competition in the space also make up for the reasons to subscribe. Those analysts are suggesting to subscribe to the issue for listing gains and long term as the future prospects of the company looks bright. “The company is among the leading CPaaS providers to enterprises, OTT players and MNOs,” stated Kotak Securities in a recent note even though it has not rated the IPO. However, a few analysts cautioned that long term investors are better off if they avoid this IPO for the moment as the company reports high current liabilities on its books comprising around 55 percent of its balance sheet. It is always advised to study the company in detail before taking the final call about investing because such investments are subject to risk. WATCH | PM Modi to virtually interact with street vendors today