Route Mobile, incorporated in the year 2004, is a small cap company (having a market cap of Rs 9111.37 Crore) operating in the services sector.
Its key products/revenue segments include sale of services for the year ended March 31, 2022.
Financials
For the quarter ended June 30, 2022, the company has reported a consolidated total income of Rs 743.80 crore, up 17.23 per cent from last quarter total income of Rs 634.48 crore and up 94.72 per cent from last year same quarter total income of Rs 381.99 crore. The company has reported net profit after tax of Rs 71.07 crore in the latest quarter.
The company’s top management includes Mr.Sandipkumar Gupta, Mr.Rajdipkumar Gupta, Mr.Chandrakant Gupta, Mr.Bhaskar Pramanik, Mr.Nimesh Salot, Ms.Sudha Navandar, Mr.Arun Gupta. Company has Walker Chandiok & Co. LLP as its auditors. As of June 30, 2022, the company has a total of 6 crore shares outstanding.
Investment Rationale
Route Mobile (akin to CPaaS industry) has seen strong growth tailwinds aided by increased digital adoption in recent years which resulted in 45 percent revenue CAGR over FY20-22.
Growth momentum is sustaining through FY23 as well with increased confidence in a likely beat on company’s revised ‘growth outlook of 50 per cent YoY'(note that company started the year with a 40% growth outlook) aided by strong messaging volumes, improvement in pricing on ILD (and potentially even in NLD at the industry level) and upcoming strong seasonality in International geographies.
Route sees the recent aggressive pricing at a large PSU bank by a Telco as a ‘one-off’ suggesting that subsequent RFP’s have not seen any aggressive pricing competition.
The brokerage raises FY22-25E EPS by 5-8% led by increase in revenue growth assumptions (we raise FY23 growth to 60%+ YoY). Maintain BUY with a revised TP of INR 1,730(V/s INR 1,660 earlier) while rolling forward to Sep’23.
Promoter/FII Holdings
Promoters held 59.82 percent stake in the company as of June 30, 2022, while FIIs owned 19.94 percent, DIIs 7.03 percent.
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