Started in 2004, Route Mobile Limited, Mumbai based company, is among the leading cloud-communication platform service ("CPaaS") providers to enterprises, over-the-top ('OTT') players and mobile network operators. Company's 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 them to leverage their SMS and voice channels for digital communication ('Super Network'). 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. The omni-channel platform enables enterprises to leverage various modes of digital communication to engage with their stakeholders – including customers, employees and vendors. The range of enterprise communication services include application-to-peer ('A2P') / peer-to-application ('P2A') / 2Way Messaging, RCS, OTT business messaging, voice, email, and omni-channel communication. Further, they also offer SMS analytics, firewall, filtering and monetisation, SMS hubbing and Instant Virtual Number ('IVN') solutions to MNOs across the globe. Company's clients include some of the world's largest and well-known organisations, including a number of Fortune Global 500 companies. As of June 30, 2020, Company 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. Company's global operations included nine direct and 12 step-down subsidiaries serving the clients through 18 locations across Africa, Asia Pacific, Europe, Middle East and North America. Consistent with the strategy of pursuing inorganic growth to deepen the relationship with MNOs and broaden the product and service portfolio, they acquired 365squared Limited with effect from October 1, 2017, which operates in SMS analytics, firewall, filtering and monetization. Further, they also acquired Call2Connect, effectiveApril 1, 2017, a company which offers voice, non-voice and consulting BPO services to some of the largest enterprises in India. Company's operations are internally aligned into the following business verticals: (i) Enterprise: The enterprise vertical primarily provides cloud based communication platform to enterprises to enable digital communication through multiple channels including RCS, A2P / P2A messaging, 2Way Messaging, OTT business messaging, enterprise email and URL shortening; and Mail2SMS. The platform also provides enterprise voice application services including interactive voice response, Click2Call, missed call facility and outbound dialer, which enable enterprises, to connect incoming and outgoing voice calls to their applications and systems. They have also launched RouteMobile API Developer Network – a program that enables developers to leverage capabilities of the platform and seamlessly deploy digital communication features within their applications / software. (ii) Mobile operator: The main service offerings in this segment include SMS analytics, firewall, filtering, monetization and CPaaS and hubbing solutions. The analytics based SMS firewall solution helps MNOs identify grey route traffic terminating on their networks, block grey route traffic, identify the source of such grey route traffic, and monetize such traffic. (iii) Business Process Outsourcing ('BPO'): They provide a range of BPO services including client support, technical support, booking and collection services. The strategic objective is to integrate the BPO capabilities with enterprise voice platform and deliver end-to-end offerings to enterprise customers. RML is an associate member of the GSMA and an accredited open hub connectivity solution provider with its internally developed cloud communications platform allowing us to handle both A2P and peer-to-peer ('P2P') traffic for enterprises, OTT players and MNOs. In addition, Route Mobile (UK) Limited is also an associate member of GSMA. In the Q1 FY20, through the cloud communications platform, they processed more than 6.95 billion billable transactions. In Fiscal 2020, the platform managed more than 30.31 billion billable transactions from the clients and was used by more than 2,700 clients while it managed more than 24.74 billion billable transactions in Fiscal 2019. They have established direct relationships with MNOs that provide their clients with global connectivity. As of June 30, 2020, they had direct relationships with over 240 MNOs and four short messaging service centres hosted in various geographies As of June 30, 2020, RML had a total of 318 employees, including 27 employees located outside India. As per financial performance, RML has posted total income/net profits of Rs. 509.49 cr. / Rs. 49.79 cr. (FY18), Rs. 852.38 cr. / Rs. 58.75 cr. (FY19) and Rs. 968.10 cr. / Rs. 74.84 cr. (FY20). For upto Q1 of FY21, it has reported net profit of Rs. 26.50 cr. on total revenue of Rs. 312.30 cr. So company has posted consistent growth over last couple of years. RML has posted an average EPS of Rs. 12.24 and average RoNW of 26.55% for last three fiscals. Issue is priced at a P/BV of 5.89 as per NAV of 59.40 on 30.06.20. If we attribute latest earnings of FY20 on fully diluted equity post issue, then asking price is at a P/E of around 26.60 and with annualised FY21 earnings P/E is 18.78. As per RHP, there is no listed peers available. As this domain is related to IT sector and when we compare with IT companies, IPO looks reasonably priced. On BRLM's front, four merchant bankers associated with this issue and have handled 35 public issues in the past three years. When we take recent 10 IPOs of each BRLM then out of those 4 issues opened below their offer price and remaining above issue price on listing dates. As of now, from last 10 IPOs, 8 are trading above issue price and remaining below issue price. ( as on 05.09.20 ) As per financials, company's growth is consistent and very good, RoNW is 26.55% for last three fiscals and issue is priced at P/E of around 26.60 as per FY20 earnings. Company has shown around 50% CAGR growth since FY15 and expected to grow with good rate in future also. The main concern is high rely on top 5 customers (50% in Q1 of FY20), which is increasing significantly each year. So we give SUBSCRIBE rating to this IPO.
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