Target: ₹1,733
CMP: ₹1,391.40
Route Mobile (Route) is a fast-growing Communication Platform as a Service (CPaaS) company. Route’s core product (approximately 85 per cent of revenues) is its SMS-based product, through which Route’s clients can offer services such as 2-factor authentication, bank transaction updates, e-commerce delivery updates, etc. to their end-customers via SMS.
Route has a marquee client list including Facebook, Google, ICICI Bank, etc. Route’s revenues have grown at a 5-year CAGR of 34 per cent, driven by rising digital adoption and aided by several acquisitions. The overall CPaaS industry is expected to grow at 31 per cent CAGR for the next 5 years, and Route’s focus on fast-growing geographies & acquisitions should enable it to grow faster than the market.
After raising ₹867.50 crore via a QIP in September 2021, Route has made acquisitions worth ₹531 crore over the past 6 months and has cash reserves of over ₹1,000 crore for further acquisitions. The company is also returning cash to shareholders via dividends & buybacks.
We expect revenues/EBITDA/PAT to grow at 41 per cent/52 per cent/41 per cent over FY22-24 and value Route Mobile at 33x FY24 EPS to arrive at a target price of ₹1,733.