Route Mobile Rs 600 crore IPO subscribed 73 times on final bidding day; HNI bids at 193 times

The IPO by cloud communications service provider includes a fresh issue of Rs 240 crore and offer for sale (OFS) of up to Rs 360 crore.

The Rs 600 crore Route Mobile IPO received 73.30 times bids on the final day of the bidding process. According to the BSE and NSE data, the issue received bids for 89.23 crore shares against IPO size of 1.2 crore shares. The IPO by cloud communications service provider included a fresh issue of Rs 240 crore and offer for sale (OFS) of up to Rs 360 crore. So far on the third day, a portion for Qualified Institutional Buyers (QIBs) non-institutional investors has been subscribed 89.77 times, while the reserved portion of retail individual investors (RIIs) was subscribed 12.67 times. The portion reserved for non-institutional investors (HNIs) has been subscribed 192.8 times.

Route Mobile has already amassed Rs 180 crore from anchor 15 investors before the issue opened for subscription. Most of the brokerages have given subscribe rating to the issue. “Given that there is no listed peer to compare, and based on stable financial performance and niche business model, we assign a subscribe rating on this IPO,” said brokerage and research firm Geojit Financial in a note. At the upper price band of Rs.350, Route Mobile is available at a P/E of 28.8x. “When we annualize Q1FY21 numbers we arrive at a P/E of 18.5x for FY21E on a post issue basis,” it said.

The proceeds from OFS will go to the selling shareholders, while the amount received from the sale of fresh issue will be utilised for repayment or prepayment of certain borrowings of the company, acquisitions and other strategic initiatives, purchase of office premises in Mumbai and general corporate purposes. It is observed that interest from QIBs and NIIs usually comes largely on the final day of the bidding process. “Given the impressive performance in 1QFY21, we believe there is a high probability of the company continuing to record impressive growth. We this recommend a subscribe to the issue, with the potential for healthy listing gains,” said KR Choksey Research in a note.

Route Mobile is among the leading cloud-communication platform as a service (CPaaS) to enterprises, over-the-top (OTT) players and mobile network operators (MNOs). The company established presence in all major geographies provides it an opportunity to leverage the growth in the cloud communications space. “The company has been working towards expanding major mobile communication channels, including messaging, email, OTT and voice. The future prospects of the company look stronger. Hence, we give a subscribe rating to Route Mobile limited for long term horizon,” said the brokerage firm Dealmoney in a research note.