Route Mobile: CMP: 1791 LONG TERM GROWTH 37% | fy_24: 13% Result Update
### Analysis of Route Mobile
🌐 Industry Outlook
CPaaS Market Growth:
The CPaaS market is rapidly expanding due to the increasing adoption of omnichannel communication solutions across industries like fintech, e-commerce, and edtech.
Route Mobile’s focus on AI-powered communication tools, including WhatsApp-based AI chatbots, positions it for sustained growth in high-demand sectors.
- **Company Overview**:
- Route Mobile is a leading cloud communications platform service provider offering messaging, voice, email, SMS filtering, analytics, and monetization services. A cloud communications platform service provider, catering to enterprises, over-the-top (OTT) players and mobile network operators (MNO). RML has a diverse enterprise client base across a broad range of industries including social media companies, banks and financial institutions, e-commerce entities and travel aggregators. - Headquarters: Mumbai, India
- Global presence in Asia Pacific, Middle East, Africa, Europe, and the Americas. Expanded UAE in 2013 today giving 10% sales, Expanded in Nigeria in 2014 & today with around 6%share came with the Bumper IPO last year.
- **Segment Details**:
- **Messaging**: Core business segment, contributing 60% of total revenue.
- **Voice**: 20% of total revenue.
- **Email**: 10% of total revenue.
- **Other Services (SMS filtering, analytics, monetization)**: 10% of total revenue.
### Peer Group Analysis
- **Peers**: Twilio, Vonage, Sinch, and Infobip.
- **Comparative Performance**:
- Route Mobile has shown stronger revenue growth compared to Twilio and Sinch.
- Profit margins are competitive, with Route Mobile's operating and net profit margins surpassing some peers.
During the IPO we expected the growth of 25% for next 5-10 Years and we saw the same. Sales have grown during the last 5 years from 364 Cr to 4000 Cr last year. We will expect 5000 Cr just in the next 2 years. Good growth as expected. Profits from 61 Cr to 389 Cr & we may see 500 Cr Profits in next 2-3 Years. Yes, we can expect growth of 20% CAGR even during the next decade. They are a low debt company, with consistent margins and profitability. Serving 9 out of 20 most valuable top global brands.
### Reverse Merger
Proximus Group acquired 57.56% of Route Mobile (fully diluted), through Proximus Opal, for ~ ₹59,224mn cash at ₹1,626.40 per share . Proximus Opal launched an MTO for up to 26% of the fully diluted outstanding shares at ₹1,626.40 per share. Founding shareholders of Route Mobile were to re-invest ~€299.6mn in Proximus Opal, for up to 14.5% of the shares. Rajdip Gupta (CEO of Route Mobile) lead the CPaaS activities and Christophe Van de Weyer (CEO of Telesign) will lead the Group Digital Identity activities.
🌟 Q2 FY25 Financial Highlights 🌟
Total Revenue: ₹2,349 crores
Growth: 📈 9.7% YoY increase from ₹2,150 crores in Q2 FY24
Quarter-on-Quarter (QoQ): 📉 0.9% decrease from ₹2,397 crores in Q1 FY25
Profit After Tax (PAT): ₹1,070 crores
Growth: 📈 21.1% YoY increase from ₹884 crores in Q2 FY24
QoQ: 📈 31.9% increase from ₹812 crores in Q1 FY25
Earnings Per Share (EPS): ₹28.63
📉 Slight decrease compared to ₹29.01 in H1 FY24, still reflecting strong performance across both quarters.
📊 Segment-wise Performance
India Operations 🇮🇳
Revenue: ₹469.07 crores for H1 FY25
Growth: 📈 35.87% YoY increase from ₹345.11 crores in H1 FY24
Q2 FY25 Revenue: ₹231.45 crores
YoY: 📈 29.1% growth from ₹179.24 crores in Q2 FY24
QoQ: 📉 2.6% decrease from ₹237.62 crores in Q1 FY25
Overseas Operations 🌍
Revenue: ₹2,135.59 crores for H1 FY25
Growth: 📈 15.21% YoY increase from ₹1,853.76 crores in H1 FY24
Q2 FY25 Overseas Revenue: ₹1,043.79 crores
YoY: 📈 8.5% increase from ₹961.82 crores in Q2 FY24
QoQ: 📉 4.4% decrease from ₹1,091.80 crores in Q1 FY25
Inter-segment Adjustments
Revenue Adjustments: ₹161.83 crores in Q2 FY25
📉 Decrease from ₹226 crores in Q1 FY25 but higher than ₹126.45 crores in Q2 FY24.
📈 Key Financial Ratios
EBITDA:
Q2 FY25: ₹1,352 crores
Growth: 📈 5.5% YoY from ₹1,281 crores in Q2 FY24
QoQ: 📈 9.3% increase from ₹1,238 crores in Q1 FY25
EBITDA Margin: 12.1%
📉 Slight decrease from 12.6% in Q2 FY24
PAT Margin:
Q2 FY25: 9.6%
YoY: 📈 Improved from 8.7% in Q2 FY24
QoQ: 📈 Improved from 7.4% in Q1 FY25
Net Profit Margin:
Q2 FY25: 9.57%
YoY: 📈 Improved from 8.77% in Q2 FY24
QoQ: 📈 Improved from 7.37% in Q1 FY25
Return on Equity (ROE):
Q2 FY25: 18.2%
📈 Improved from 16.5% in Q2 FY24
Debt to Equity Ratio:
Q2 FY25: 0.20
📉 Improved from 0.25 in Q2 FY24, reflecting reduced reliance on debt
Quick Ratio:
Q2 FY25: 1.96
📈 Indicates better liquidity management
Current Ratio:
Q2 FY25: 2.18
📉 Slight decrease from 2.21 in Q2 FY24, still reflecting solid liquidity management
### Future Outlook
- **Growth Prospects**:
- Continued strong growth expected in messaging and voice segments.
- Expansion in new markets and deeper penetration in existing markets.
- Strategic partnerships and acquisitions to drive future growth.
- **Challenges**:
- Increasing competition in the cloud communications sector.
- Regulatory challenges in different regions.
### Recent Strategic Partnerships
1. **Microsoft Partnership**:
- **Details**: Proximus Group, the parent company of Route Mobile, signed a 5-year strategic partnership with Microsoft.
- **Benefits**:
- Enhanced cloud capabilities leveraging Microsoft Azure.
- Integration of AI technologies to improve customer service and operations.
- Strengthened position in the global digital communications market.
2. **WhatsApp Ticketing for Metro Services**:
- **Details**: Route Mobile partnered with Billeasy to enable WhatsApp-based ticketing for Nagpur, Pune, Hyderabad, and Delhi metros.
- **Benefits**:
- Simplified ticketing process for over 75 lakh daily commuters.
- Increased user engagement and service adoption.
- Strengthened Route Mobile's position as a leading enabler of WhatsApp-based services in India.
🚀 Company's Future Outlook
Strategic Partnerships:
Route Mobile’s collaborations with Proximus and Infosys enable it to enhance its product offerings in cloud communications and AI-driven customer engagement solutions.
Cash Flow & Liquidity:
₹11,145 crores in cash reserves as of September 30, 2024, ensures the company has strong liquidity to invest in future projects and acquisitions.
Net cash balance of ₹5,836 crores reinforces Route Mobile's solid financial standing.
Dividend Announcement 💸:
Route Mobile has declared an interim dividend of ₹6 per share, showcasing its commitment to delivering value to its shareholders.
By leveraging these strategic partnerships, Route Mobile aims to drive innovation and enhance its service offerings, positioning itself as a leader in the cloud communications sector. These collaborations are expected to provide long-term growth opportunities and reinforce the company's market position.
All those holding since IPO or added during any opportunity can add more during the current correction due to slow down. New buying can be done during this fall near 1300 while this year's target should be 2060.
Add this company for long-term wealth giving around 1.25% weightage of the portfolio expecting a multiyear rally along with consistent and growing dividends.
With around 7% MF holding and 20% FPI holding.
DISCLOSURE: FOR EDUCATION PURPOSES, DO NOT TREAT AS A RECOMMENDATION
