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This article is more than 1 year old.

Brokerages tell why you should subscribe the latest Route Mobile IPO

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Most analysts are bullish on the issue for the long term, as well as listing gains.

Brokerages tell why you should subscribe the latest Route Mobile IPO
The initial public offering (IPO) of Route Mobile which opens on Wednesday proposes to raise Rs 600 crore. The funds raised from the fresh issue will be utilised to repay debt, make a strategic acquisition, purchase office premises in Mumbai and balance for general corporate purposes.
Of the Rs 600 crore, fresh issue of shares worth Rs 240 crore will be issued and the remaining Rs 360 crore will be raised through offer for sale (OFS) route by promoters Y Sandipkumar Gupta and Rajdipkumar Gupta. This would result in the promoters' stake reducing from 96 percent pre-IPO to 66.3 percent post-IPO in the firm.
A price band of Rs 345-350 apiece per share has been fixed for the IPO that will conclude on September 11.
Most analysts are bullish on the issue for the long term, as well as listing gains, given the diversification in service offerings, robust growth opportunity in cloud communication, no major competition and good financial performance. They also expected a strong digital growth post-COVID-19 world.
Here's what brokerages have to say:
Motilal Oswal
As per the brokerage, the company is well-diversified globally/across industries, with a presence in high potential markets. It also enjoys a strong relationship with 240 mobile network operators globally, which provides RML with access to over 800 mobile networks and helps in serving its enterprise clients better with the flexibility of multiple routes, better speed delivery and cost optimisation/message, MOSL added.
At the higher end of the price band, the issue is valued at 29x FY20 P/E (fully diluted), which is comparable to mid-sized IT firms (no listed peers available). It recommends Subscribe to the IPO given its strong presence in the niche 'Communications Platform as a Service' market with high entry barriers and healthy financials. Further given the small offer size and presence in niche IT space, one may get listing gains too, it further noted.
Dealmoney
The company has diverse service offerings for the enterprise client base and has a strong distribution network and has also established its presence in all major geographies provides it an opportunity to leverage the growth in the cloud communications space, said the brokerage. Robust business model, consistent financial track record and scalable delivery platform supported by robust infrastructure are key positive, added Dealmoney.
The future prospects of the company look stronger, hence, the brokerage gives a Subscribe rating to Route Mobile limited for long term horizon.
Angel Broking
According to the brokerage, COVID-19 has led to better growth prospects for the Company given the increased adoption of digital technologies, unlike many other businesses.
At the upper end of the price band, the company demands a PE multiple of 25.3x on FY20 EPS, which the brokerage believes is quite reasonable considering the future prospects of the company. It is positive on the future outlook for the industry as well as the company and thus recommends “Subscribing” to the issue for the long term as well as for listing gains.
Religare Broking
The financial track record has been encouraging for the company, said the brokerage, adding that going forward, it believes the growth prospects look promising for the company led by positive industry trends coupled with the company's constant focus on innovation, enhancing offerings and widening geographical reach. Further, it would continue to focus on in-organic opportunities which would aid growth momentum and widen its service offerings, it stated. It advises that one can invest in the company for the long term.
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