The initial public offer IPO of Route Mobile received bids 14.48 times the issue size so far on the final day of bidding. The Rs 600-crore public offer of Route Mobile, a cloud communications service provider, received bids for 17.63 crore shares against the total issue size of 1.21 crore shares, according to data available with the exchanges.
The portion set aside for qualified institutional investors received bids 6.72 times the allotted size. Portion for non-institutional investors was subscribed 11.39 times, and the reserved portion for retail investors was subscribed 9.6 times. On day 2, the IPO received 4.15 times bids compared to the issue size. As per data with NSE, the issue received bids for 5,05,09,920 shares by the end Thursday.
The IPO was fully subscribed on the first day. The public offer received bids for 1,22,31,600 shares against the total issue size of 1,21,73,912 shares. The portion for non-institutional investors was subscribed 46 per cent, that for qualified institutional buyers (QIBs) was subscribed 1 per cent. The retail individual investors' portion was subscribed 1.80 times.
Route Mobile on September 8 collected Rs 180 crore from anchor investors. The initial public offer comprises a fresh issue of Rs 240 crore and an offer for sale of Rs 360 crore. Price range for the offer, which will close on Friday, has been fixed at Rs 345-350 per share.
The company proposes to utilise the net proceeds for repayment or pre-payment, in full or part, of certain borrowings of the company, acquisitions and other strategic initiatives, purchase of office premises in Mumbai, and general corporate purposes.
ICICI Securities, Axis Capital, Edelweiss Financial Services and IDBI Capital Markets and Securities are the managers to the offer.
Here's a look at what brokerages said about the Rs 600 crore and whether it is a good issue to invest.
Motilal Oswal: Subscribe 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). We recommend Subscribe to the IPO given RML's strong presence in niche CPaaS market with high entry barrier and healthy financials. Further given the small offer size and presence in niche IT space, one may get listing gains too.
Angel Broking: Subscribe
Route Mobile raised Rs 180 crore on Tuesday ahead of the IPO from 15 anchor investors. As expected by us, Route Mobile IPO is fully subscribed. Retail portion was most subscribed to 1.8 times. We expect the traction is going to be good for the IPO as a lot is left on the table for the investors. We also expect the IPO to be subscribed manifold. As we are positive on the future outlook for the industry as well as the Company, we have recommended to "Subscribe" to the issue for long term as well as for listing gains."
Geojit : Subscribe
At the upper price band of Rs 350, Route Mobile is available at a P/E of 28.8x and when we annualize Q1FY21 numbers we arrive at a P/E of 18.5x for FY21E on a post issue basis. 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.