ROUTE: A Twofold (Report of 120% Markup)

28 ene 2022

IID-03
ROUTE MOBILE LTD



REGIME 🔍
Overview
Quantitative analysis
Qualitative analysis
Final words



Overview 📜
{
Route Mobile Limited provides cloud-communication platform services (CXPaas) to enterprises, over-the-top players, and mobile network operators in Africa, Asia Pacific, Europe, the Middle East, and North America.

RML is based on an Omni-channel Digital Communication Platform which offers messaging, voice, email, short messaging service (SMS) filtering, analytics, monetization, firewall, and instant virtual number solutions. It provides its cloud-communication services to clients in the social media, banking, and financial services, aviation, retail, e-commerce, logistics, healthcare, hospitality, media and entertainment, pharmaceuticals, and telecom sectors.

Founded
In 2004 by Rajdip Kumar Gupta

RML in nutshell 🟢
RML is the Industry Leading Global CXPaaS Platform. They're serving 9 of the 20 most valuable Global tech brands with a presence across 16+ locations globally.

Let's come to characterization.

1. Revenue Split Across Industries:🟢
Digital Native (34%)
FinServ (11%)
Tier 1 CPaaS (9%)
Telecom and allied services (7%)
Retail (4%)
Ecommerce (2%)
Travel (1%)

2. Revenue Split Across Countries:🟢
India (33%)
Asia excl. India (24%)
Africa (16%)
Middle East (9%)
Europe (5%)
Americas (4%)

3. Service Area: 🟢
-Messaging:
They have reached global audiences instantly through their customizable messaging platform.

-Voice:
-Conversational AI
-Customer Data Platform & Marketing Automation
-SMS Firewall
-ECM (Campaign Manager)
-Messaging Hub

They provide Tools (7 packages), Identity Solutions (11 packages) with high customer engagement

4. Explicit Data: 2022 🟢
Route Mobile has made 5 acquisitions and 1 investment. The company has spent over 51M on the acquisitions. Route Mobile has invested in multiple sectors such as Customer Success Management, Customer Service Software, Chatbots, and more.

Recent acquisitions
[
1. Masivian:
Masivian is one of the leading cloud communication platform service providers to enterprises, over-the-top (OTT) platforms, and mobile network operators in the region. RML has closed a deal at 47.5m on 11 Nov 2021

2. Phonon:
Route Mobile will acquire AI platform provider Phonon Communications Pvt Ltd in an all-cash deal for Rs 29 crore, to offer automation and contact center solutions at scale to enterprises globally. The deal has closed on April 2021

3. Call2Connect:
Acquired in May 2017. Route Mobile global CEO Rajdip Gupta said his company is in a position to double Call2Connect’s revenue because of its existing client base.

4. 365Squared:
a premier European headquartered SMS Monetisation Value Added Services brand. 365squared are industry experts of the Managed SMS firewall concept. The deal has closed in April 2017
]

5. Takeovers 2022 🟢

New products (Q1 FY2022
[
- Email:
They have acquired an email platform from Sarv, branded as SendClean. They have planned USD12mn investment in SendClean Inc. over the next 3 years

- Rapid:
A Global Developer API initiative (Q2 FY2022)

- Rich Communication Services (RCS):
RML propelling the adoption of RCS with enterprises to render better User Experience

-Truecaller:
Truecaller partnership for Verified Business Caller ID
]

In Sep 2021, one of their biggest operator (BSNL) has selected cloud communications platform service provider Route Mobile to deploy the company's SMS Firewall Platform across the Southern and Western Zones in India.

Key takeaways 🟢

What they have planned for the next 3 years?
1. SendClean:
Their Independent E-mail Marketing Business Unit has planned a model to make USD 30MN as Email Business Expected Gross margins 80%

2. CPaaS:
Double-digit Market growth by 2025 as:
Email: 7.5Bn (2020) to 17Bn (2025)
CpaaS: 7Bn (2020) to 25BN (2025)
}



Quantitative analysis 💰
{
Fundamentals 🟢
1. PE: 65 as compared to its peers Tanla Platforms and Coforge 46.70 and 49.68 respectively.
2. M.Cap: 10,000Cr (MidCap)
3. D/E Ratio: 0.02 (insignificant)
4. Book-Value: 14.2 (greater than 1) and Significantly higher than Industry 10
5. Sales: Increased by 46% QoQ (Q4)
6. OPM%: 35% QoQ
7. PAT: Surged by 23% QoQ
8. ROCE & ROE: 33% vs 28.9% Expected YOY
9. Reserves: Increased by 12.3%
10. Promoter Dilution: 9% YoY

Key takeaways 🟢
1. MarketCap is 10,000Cr, Revenue is 1,506Cr, Earnings are 152Cr (⭐)
2. Dividend Yield: 0.12 vs peers above 0.55% (⭕)
3. P/E company vs market: 62.9xx vs 22.3x (⭕)
4. P/B company vs market: 13x vs 1.8x (⭕)
5. Future growth: 45.7% YoY (FY 2021-2022) expected (⭐)

ROI Diversification 🟢
- Email: 59%
- Google display ads: 21%
- Social Media: 15%
- Video Ads: 5%

Stimulants 🟢
1. New Product Sales:

Q1 FY2021 (49) vs Q1 FY2022 (113): +130% YoY
Next-generation messaging channels, viz. enterprise voice solutions, IP based messaging, email
and unified communication solutions continue to witness increasing adoption by enterprises

2. Recurring Revenue Growth
FY2021 (91%) vs FY2022 (90%): -1.09% YoY

Consistency due to deep customer engagement driving high recurring revenues

3. Expansion of their wholly-owned subsidiaries
-Call2Connect:
Inaugurated a 1,000 seater BPO center at Virar, Mumbai, on Oct 15, 2021, to support the growth of Call2Connect business operations



Technicals 🟢

Behavior
1. Trend Identification: Uptrend
2. Consistent volume: (Yes) below 1m Weekly
3. Individual Resistance/Support: @920 (77m Heaviest)
4. Individual Support/Demand: No
5. Current Resistance/Supply: @2150.
6. Current Support/Demand: @1700, Closed below: @1450
6. Market Cycle: Primary Trend with Markdown (1W)
7. MA Support: Below 50MA broke and retracing back(Strong)
8. Fib retracement: 0.07 Negative.

Momentum
1. Multi-frame: Monthly- Retest, Weekly-Downtrend
2. Wave analysis: In Markdown (Downtrend),
3. Higher Highs: No
4. Lower-Lows: Yes, Retracing back

Pattern
1. Structure: Mulit-Head & Shoulder
2. Trendline: 14-month uptrend & 5 wicks support
3. Wick Identification: Bullish.
4. Beta: 1.01 (+ve) and Volatile

Entry
Weekly Closed (1700-1800): Buy ratings above (@1700)
Weekly Closed (Below 1600): Buy ratings @1450

FCFM 🟢
What is FCFM?
FCFM is a Fractal Core of Financial Markets developed by CENTURY. It's based on the empirical values taken through compounding markups or markdowns of particular Security.

FCFM helps to evaluate the future valuation of security with the companionship of market participants and circumstances of consecutive +ve corporate earnings.

Current Zones
FCFM Demand/Support: @1610
FCFM Resistance/Supply: @2150

Future Zones
FCFM Demand/Support: @2150
FCFM Resistance/Supply: @3050

FCFM has relevant levels considering the corporate earnings of RML has increased QoQ and YoY by 23% and 45.7% respectively.
}



Qualitative Analysis 💎
{
Management 🟢
Route Mobile Ltd. leadership is very tech-driven and the co-founders have 2 decades of experience. The board members are independent of the company profile except for co-founders and Tonio Ellul CEO & Director of 365squared Ltd.

- Mr. Sandipkumar Chandrakant Gupta is a Co-Founder of Route Mobile Limited and serves as its Non-Executive Director since May 15, 2004. Mr. Gupta serves as Non-Executive Non-Independent at Route Mobile Limited since November 19, 2020. He has worked for many organizations which include PriceWaterhouseCoopers - India, and Covansys (India) Pvt.

Mr. Rajdip Kumar Chandrakant Gupta is a Co-Founder of Route Mobile Limited and serves as its Managing Director and its Director since May 15, 2004. He serves as Group Chief Executive Officer at Route Mobile Limited since May 2004. Mr. Gupta serves as Group Chief Executive Officer of Call 2 Connect India Private Limited. Mr. Gupta has industrial experience in the Software and Telecommunications domain.

The Company announced the appointment of Mr. Bhaskar Pramanik as an Additional and Independent Director on the Board of the Company on Aug 10, 2021.

Mr. Pramanik is a seasoned entrepreneur and a tech disruptor with a career spanning over 45 years. He has held key National and Global Leadership positions in leading Multinational Technology Companies, across India, Singapore, and the US. Mr. Pramanik was also on the Executive Committee of NASSCOM, the National Committee of CII and AMCHAM, and has been a former Board member of the State Bank of India, former Chairman of Microsoft India, and Managing Director at Oracle Corporation and Sun Microsystems in India

Vision of RML
Route Mobile’s founder and Group chief executive (CEO) Rajdip Kumar Gupta said Latin America will be its second-biggest market after Asia.

The company has raised 867.49 crores in November 2021. The 60% of this capital will be used to acquire the business and grow organically.

Key point: Company Capex would lead to acquiring innovative technologies result in high growth in ROI and their diversified portfolio of revenue will further attract wealthy investors

Ownership 🟢
Promoters: 59.98
FIIs: 19.80
DIIs: 6.65
Government: 0%
Public: 13.56%

Top Shareholders 🟢
1. Sandipkumar Gupta (Co-founder) (30.02%)
2. Rajdip Kumar Gupta (Co-founder) (22.07%)
3. Goldman Sachs Asset Management, L.P. (5.23%)
4. Chandrakant Gupta (4.23%)
5. PineBridge Investments LLC (3.68%)
6. Nippon Life India Asset Management Limited (2.09%)
7. Abakkus Asset Management, LLP (2.83%)
8. ICICI Prudential Asset Management Company Limited (0.81%)

SWOT Analysis 🟢
1. Strenght
- Recognized as “Established Leader” by Industry Analysts
- Leading CPaaS provider.
- Product line expansion – Acquired business email technologies re-branded as SendClean Geographical expansion - Signed SPA to acquire Masivian (LatAm) and InterTeleco (Kuwait)
- Subsidiaries across the nation (5 Subsidiaries)
- The debt to equity ratio is about 0.02%
- Impressive ROI

2. Weakness
- Tier 1 CPaaS partners from revenue generated only 9%
- Revenue to Cost of Revenue is likely above 90% can decimate Revenue growth if there'll be economic drawdowns or recession

3. Opportunity
- Capex growth for new overtakes and plants
- Acquisitions across the nation
- Expansion of Geographical Footprint (Masiv’s differentiated cloud communication platform and Inter Teleco Platform)
- Able to achieve the Product Portfolio Expansion.

4. Threat
- NA.
}



Final Words 💊
{
Route Mobile Ltd. has massive size wings compared to its size. From company management to their diversified business model put it to the top striving companies in future. The progression is likely to be twofold in the upcoming 3years. If we talk about the risks including Legislative, Inflationary, Model, and Obsolescence. The company's overall current position and performance are capable to overtake.

They've already engaged themselves in the development of Next-Gen services like RBM and OTT messaging. Messaging and Voice handling are their main key products.

The given targets for RML are relevant as FCFM validates and certifies the required parameters.

FCFM
ABP (Average buy price) / BV (Book Value): 1450rs
FV (Future Value): 3050 Year 2023
}



Report By:
Rajveer Singh Scolia.


ROUTE

11 mar 2022

Nota

Target 1: We hit +20% and heading towards 25% which is our Q3 target.

Blew up the entry levels... I hope you enjoyed the pinpoint accuracy.

Next update soon!
Don't forget, promoters never sold their stakes either the stock hit multi-highs or multi-lows.
Always act like you're one of the promoter!