The public issue of Route Mobile, the cloud communication platform as a service provider, has subscribed 77.88 percent on September 9, the first day of bidding.
The IPO has received bids for 94.61 lakh equity shares against offer size of over 1.21 crore equity shares, the data available on exchanges showed.
The respone from retail investors remained good so far, as their reserved portion witnessed 144 percent subscription. The portion set aside for non-institutional investors subscribed 25.8 percent and that of qualified institutional buyers 1.21 percent.
The Rs 600-crore public issue consists a fresh issue of Rs 240 crore and an offer for sale of Rs 360 crore by promoters – Sandipkumar Gupta and Rajdipkumar Gupta. Route Mobile already raised Rs 180 crore from anchor investors at higher end of price band.
The price band has been fixed at Rs 345-350 per share and the issue will close on September 11.
“We are optimistic on Route Mobile IPO considering its leading position in cloud-communication, OTT segment and MNOs space. With growing internet penetration and business models adopting digital platform with cloud communication services being need of the hour to digital world, we believe investors should tap this opportunity,” Prashanth Tapse, AVP Research at Mehta Equities said.
Route Mobile does not have a direct comparable listed peer in India. It will become the second firm in the larger mobile communication services after Affle India.
“On valuations parse at upper price band (Rs 350 per share), the issue is asking for market cap Rs 1,990 crore and we believe the company can comfortably command a PE of 24x-25x, which makes the IPO valuation fairly attractive for long term investors. Considering all the parameters we recommend to subscribe for the issue, with the potential for healthy listing gains as well as long term stock,” Tapse said.
Route Mobile provides cloud-communication platform as a service (CPaaS) to enterprises, over-the-top (OTT) players and mobile network operators (MNOs).
Company had direct relationships with over 240 MNOs and four short messaging service centres hosted in various geographies across the globe, as of June 2020. Company is able to access more than 800 networks across the world.
The company had served over 30,150 clients by June 2020, cumulatively since inception globally through its offices across Africa, Asia Pacific, Europe, Middle East and North America.
Route Mobile will utilise its fresh issue proceeds for repayment of certain borrowings, acquisitions and other strategic initiatives, purchase of office premises in Mumbai, and general corporate purposes.
Motilal Oswal also recommended subscribe to the IPO given Route Mobile’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, the brokerage feels.
News Source:- Moneycontrol