Shares of Route Mobile Ltd made a stellar stock markets debut on Monday. The stock listed at ₹717, a premium of 104.85% over its issue price of ₹350 a piece.
The ₹600-crore issue of Route Mobile was subscribed 73 times with a price band of of Rs345-Rs350 per share. The initial public offering (IPO) was open for subscription during 9-11 September.
“At the higher end of the price band, the issue is valued at 29 times FY20 price-to-earnings, which is comparable to mid-sized IT firms,” Sneha Poddar, Research Analyst, Motilal Oswal Financial Services Ltd said. Poddar added that Route Mobile’s strong presence in niche CPaaS market with high entry barrier and healthy financials make it favourable.
Net proceeds of the issue will be utilized for funding repayment or pre-payment, in full or part, of certain borrowings of the company, acquisitions and other strategic initiatives, purchase of office premises in Mumbai and general corporate purposes.
Between FY18 and FY20 the company has grown at a compound annual growth rate (CAGR) of 37.6%. Around 80.8% of Route Mobile’s revenues comes from exports and 19.2% from domestic clients. Route Mobile’s CPaaS (Communications Platform as a Service) platform facilitates omni channel communication for multiple industries across small, medium and large enterprises , mobile network operators and OTT (over-the-top) players , resulting in enhanced engagement, customer retention and brand loyalty.
The company operates through prepaid and postpaid business models with high operating margins and low cost base. The indigenously developed CPaaS platform is scalable, with limited capital expenditure requirements.
In FY20, Route Mobile processed more than 30.31 billion billable transactions, and in the three months ended 2020, it processed more than 6.95 billion billable transactions. The company generated revenue from operations Rs504.9 crore, Rs844.6 crore, Rs956.2 crore and Rs309.6 crore in fiscal 2018, 2019 and 2020, and in the three months ended June 30, 2020, respectively.
ICICI Securities Limited, Axis Capital Limited, Edelweiss Financial Services Limited and IDBI Capital Markets & Securities Limited were book running lead managers of the issue.