Route Mobile gets Board Approval to Raise Rs.2,000 CR

In its latest meeting of shareholders, the board has approved the raising of funds to the tune of Rs.2,000 crore via the issue of securities. This could be via the issue of equity shares or other securities. The amount is likely to be raised in tranches through the year and this is more of a blanket approval from the board for the fund raising plans.

The shareholder meeting had two main items in its agenda. The first was to raise funds via issue of securities to the tune of Rs.2,000 crore. The other item on the agenda was to enhance the investment limit for foreign portfolio investors or FPIs considering the elevated levels of interest that the QIBs had been showing in new technology companies in India.

As per the scrutinizer report, more than 95% of the votes of shareholders were in favour of raising the Rs.2,000 crore funding. The public institutional shareholders did not share that enthusiasm as nearly a quarter of them voted against the fund raising. However, on the vote for raising FPI stake in Route Mobile, the mandate was more decisive at over 99% favourable votes.

Route Mobile offers comprehensive enterprise communication solutions and offers what is called the CPAAS (communication platform as a service). This is something akin to the logic of SAAS. The CPAAS global market is expected to grow from the current $8.7 billion to $34.2 billion by 2026, which is an exponential growth market for Route Mobile in the next 5 years.

For FY21, Route Mobile reported Rs,1,406 crore by way of revenues and Rs.176 crore as EBITDA. The company also has a solid ROCE of 34.4% and ROE of 30.8% as of FY21. In the next few years, Route Mobile is looking to organically and inorganically expand its CPAAS platform to offer better customer experience. That will be capital intensive.

One question that does arise is whether Route Mobile really requires funds just one year after a mega IPO that was oversubscribed nearly 74 times? But, then as the old saying in the stock market goes, it is always advisable to raise funds when the iron is hot, so that funds are available when you actually need it.