Route Mobile IPO to open on September 9: 10 key things you must know before subscribing

Cloud communication platform provider Route Mobile is set to open its initial public offering for three days on September 9.

The anchor investors' book will close on September 8, a day ahead of issue opening, and the IPO closing date is September 11.

The book running lead managers to public issue are ICICI Securities, Axis Capital, Edelweiss Financial Services and IDBI Capital Markets & Securities. KFin Technologies is registrar to the offer.

Equity shares are proposed to be listed on National Stock Exchange of India and BSE Limited.

Here are 10 key things to you must know before subscribing the issue:

1) Public Issue

The company targets to garner Rs 600 crore via public issue. The IPO comprises a fresh issue of up to Rs 240 crore and an offer for sale of up to Rs 360 crore by promoters.

Promoters Sandipkumar Gupta, Non-Executive Director, and Rajdipkumar Gupta, Managing Director are going to sell Rs 180 crore worth of shares each via offer for sale.

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2) Price Band and Bid Lot

Route Mobile has fixed a public offer price band at Rs 345-350 per share. One can bid for a minimum of 40 equity shares and in multiples of 40 equity shares thereafter.

3) Objectives of Public Issue

The omnichannel cloud communication service provider will utilise the fresh issue proceeds for repayment or pre-payment of certain borrowings; acquisitions and other strategic initiatives; purchase of office premises in Mumbai; and general corporate purposes.

The proceeds from the offer for sale will be received by the selling shareholders and Company will not receive any proceeds from the offer for sale.

4) Company Profile

Incorporate in 2004, Route Mobile is a cloud communications platform service provider, catering to enterprises, over-the-top (OTT) players and mobile network operators (MNO). Its portfolio comprises solutions in application-to-peer (A2P) / peer-to-application (P2A) / 2Way Messaging, RCS, OTT business messaging, voice, email, and omni-channel communication.

The business verticals of the company are enterprises, mobile operator, and business process outsourcing. Its global operations included nine direct and 12 step-down subsidiaries serving clients through 18 locations across Africa, Asia Pacific, Europe, Middle East and North America.

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Its enterprise solution comprises two primary components – the front-end that provides an interface for enterprises to integrate with, and a back-end which is directly integrated with over 240 MNOs, and provides access to over 800 MNOs across the globe, as of June 30, 2020, enabling company to leverage their SMS and voice channels for digital communication. Further, the backend is also integrated with OTT business messaging solution providers, and is capable of supporting Rich Communication Services (RCS) business messaging, offering multiple channels of communication to enterprises. Its omni-channel platform enables enterprises to leverage various modes of digital communication to engage with their stakeholders – including customers, employees and vendors.

Company has served more than 30,150 clients since its inception, as of June 30, 2020. In Fiscal 2020 and in the three months ended June 30, 2020, we serviced 2,787 customers and 1,380 customers, respectively.

The company operates through prepaid and postpaid business models with high operating margins and low cost base. In FY20, Route Mobile processed more than 30.31 billion billable transactions and three months ended 2020, it processed more than 6.95 billion billable transactions.

Route Mobile has four group companies - Zon Hotels Private Limited; 29 Three Holidays Private Limited; Cobx Gaming Private Limited; and Horizon Sports India Private Limited.

5) Competitive Strengths

>>Omni-channel cloud communication platform service provider with diversified service offerings for enterprises;
>>MNO focused suite of products;
>>Global connectivity through established relationships with mobile network operators;
>>Diversified and global client base across industries serviced locally;
>>Scalable delivery platform supported by robust infrastructure;
>>Robust business model and consistent financial track record;

>>Experienced Promoters and senior management team.

6) Business Strategies

Route Mobile's business strategies are focused on:
>>Continue to develop omni-channel digital communication offerings and innovative solutions;
>>Continue to focus on developer community program;
>>Enhance service offerings through inorganic opportunities;
>>Grow presence in additional markets to serve clients locally;

>>Leverage CPaaS (Communications Platform as a Service) platform and BPO expertise to deliver virtual contact centre solutions;

7) Financials

Profit during the year ended March 31, 2020 grew by 26.7 percent to Rs 69.1 crore and in FY19, it increased 16.8 percent to Rs 54.53 crore compared to previous year.

Revenue from operations rose by 13.2 percent to Rs 956.25 crore in the year ended March 2020 and in FY19, it grew by 67.3 percent to Rs 844.66 crore compared to previous year.

At operating level, its earnings before interest, tax, depreciation and amortisation increased by 11.7 percent to Rs 111.67 crore in FY20 and grew by 24.7 percent to Rs 99.96 crore in FY19 compared to previous year. EBITDA margin for FY20 stood at 11.53 percent against 11.73 percent in FY19.

Domestic business contributed 19.19 percent to total revenue and exports 80.81 percent in FY20.

For the quarter ended June 2020, profit stood at Rs 26.93 crore on revenue of Rs 309.6 crore and EBITDA at Rs 40.3 crore with margin at 12.90 percent.

Revenue contribution of key clients as a percentage of total revenue across various business verticals:

8) Promoters and Management

Chandrakant Gupta is the Chairman and Non-executive Director, while Rajdipkumar Gupta is Managing Director and Group Chief Executive Officer of the company.

Rajdipkumar Gupta is the promoter of company. Prior to incorporating Route Mobile, he had worked with Approved Information Systems (I) and GurukulOnline Learning Solutions. He has more than 18 years of experience in the field of software designing and development.

Sandipkumar Gupta is the Non-executive Director and promoter of the company. He is a qualified chartered accountant and a member of the Institute of Chartered Accountants of India. He is a SAP certified solution consultant – mySAP Financials – Managerial and Financial Accounting. Prior to incorporating company, he had worked with Covansys (India) and PricewaterhouseCoopers. He has over 19 years of experience in audit and accounts and business analysis, and over 15 years of experience in SAP configuration and software system consulting.

Ramachandran Sivathanu, Nimesh Salot and Sudha Navandar are Independent Directors of the company.

9) Shareholding

Promoter and promoter group held 96 percent stake in the company as of September 2, the date of red herring prospectus filing.

Sandipkumar Gupta and Rajdipkumar Gupta holds 28.46 percent stake each (1.44 crore equity shares each) pre-offer.

10) Comparison with listed industry peers

There are no listed entities in India whose business portfolio is comparable with that of Route Mobile's business.