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All You Need To Know About Route Mobile IPO

The issue opens on Sept. 9 and closes on Sept. 11.

A stream of binary coding is seen displayed on a laptop computer screen. (Photographer: Chris Ratcliffe/Bloomberg)
A stream of binary coding is seen displayed on a laptop computer screen. (Photographer: Chris Ratcliffe/Bloomberg)

Route Mobile Ltd. will launch its three-day initial public offering this week as the provider of email, voice, messaging and analytics services looks to mop up funds when the demand for online engagement has spiked because of the pandemic.

This is India’s fourth IPO since the Covid-19 pandemic disrupted the economy, following Rossari Biotech Ltd., Mindspace Business Parks REIT Ltd. and the Happiest Minds Technologies Ltd.

Route Mobile plans to raise Rs 600 crore by selling up to 1.71 crore shares at Rs 345-350 apiece, according to its red herring prospectus. The offer consists of a fresh issue and a sale of stake (offer-for-sale) by promoters Sandipkumar Gupta and Rajdipkumar Gupta.

The company, according to the prospectus, will use the proceeds to repay debt, strategic initiatives, purchasing office premises in Mumbai and general corporate purposes.

Axis Capital Ltd., ICICI Securities Ltd., Edelweiss Financial Services Ltd. and IDBI Capital Ltd. are the book running lead managers to the issue.

All You Need To Know About Route Mobile IPO
  • Issue open from Sept. 9 to 11
  • Face value: Rs 10 apiece
  • Fresh issue: 0.67 crore shares
  • Offer for sale: 1.04 crore shares
  • Listing on: NSE, BSE
  • Minimum bid: 40 shares (and in multiples of 40)

The offer values the cloud communications service provider at Rs 1,990 crore at the higher end of the price band, according to BloombergQuint’s calculations. After the share sale, the promoter shareholding will fall to 66.33% from 96%.

As many as 15 anchor investors, including SBI Mutual Fund, Nippon India, ICICI Pru, Goldman Sachs, Franklin Templeton, Kuwait Investment Authority, among others, have been allotted 51.43 lakh shares at Rs 350 apiece aggregating to Rs 180 crore, according to an exchange filing on Sept. 8.

Business

Route Mobile, founded in 2004, provides cloud communication platform as a service to enterprises, streaming apps and mobile network operators. It helps clients in their digital strategy by enabling multiple channels of communication to deliver messages to customers, suppliers, and employees. It has three key verticals:

Enterprise: Providing cloud-based communication platform.

Gautam Badalia, chief strategy officer of the Route Mobile, said in a webinar that Route Mobile estimates it enjoys 10% market share in the world in cloud communication platform segment.

Mobile Operator: SMS analytics, firewall, filtering, monetisation, cloud-communication Platform as a service and hubbing solutions. As on June 30, according to its prospectus, the company has a direct relationship with 240 mobile network operators worldwide.

Business Process Outsourcing: Client support, technical support, booking and collection services.

The company said it has serviced over 30,150 clients cumulatively since inception across sectors including social media, banking and financial services, aviation, retail, internet/e-commerce, logistics, healthcare, hospitality, media and entertainment, pharmaceuticals and telecom as on June 30.

In FY20, almost 97% of revenue came from messaging services. Almost four-fifths of total revenue comes from exports. Top five clients contributed 51% of the total revenue in the quarter ended June, with 15% are pre-paid.

Financials

Route Mobiles’ revenue, Ebidta and net profit rose at a compounded annual rate of 38%, 12% and 14%, respectively, from fiscal 2018-2020.

Peers

The company, according to its red herring prospectus, has no listed peer in India. As per BloombergQuint’s analysis, the closest competitor is Tanla Solutions Ltd. Both offer communication platform services, person messaging services and enterprises solutions.

Global competitors including Syniverse and Mblox in the U.S., SAP Mobile in Germany and CLX in Sweden.

Key Risks

  • Inability to maintain relationships or enter fresh pacts with mobile network operators.
  • Employee attrition.
  • Economic slowdown due to Covid-19.
  • Forex fluctuations.
  • Client concentration in Asia, Europe and Africa.

(Information sourced from the red herring prospectus and a report by Axis Capital)