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Route Mobile Q3 review: Bullish on new product line

Route Mobile is bullish on the company’s new products business, according to Rajdip Gupta, the founder and group chief executive officer of the company.

The cloud communication platform service provider posted an 84% increase in net profit in the quarter ended December. Its profit jumped to Rs 85.36 crore year-on-year, while revenue from operations surged 75% to Rs 985.7 crore, according to an exchange filing.

Route Mobile Q3 Earnings (Consolidated, YoY)

  • Revenue from operations up 75% to Rs 985.72 crore vs Rs 562.77 crore.
  • Net profit up 84% to Rs 85.36 crore vs Rs 46.29 crore.
  • Ebitda at Rs 124.55 crore vs Rs 60.83 crore.
  • Ebitda margin at 12.6% vs 10.8%.

The scrip was trading 7.13% higher at 2:37 p.m. as compared to a flat benchmark NSE Nifty 50 Index. The stock rose 13.41% intraday.

It closed 7.67% higher, as compared with a flat Nifty 50. Total traded quantity stood at 49.4 times the 30-day average.

The return potential of the stock is 27.7% and the relative strength index is 54.

Of the six analysts tracking the stock, five have maintained ‘buy’, one analyst recommended ‘hold’ and none suggested ‘sell’. The average of the 12-month price consensus implied a potential upside of 28.3%.

Bullish On New Product Business
Rajdip Gupta, the founder and group chief executive officer of Route Mobile, said he is bullish on the company’s new products business.

The segment clocked quarterly revenue of Rs 42.5 crore in October-December, registering 53% growth year-on-year and 19% sequential increase, according to its stock exchange filing.

According to Gupta, the new product line is expected to clock revenue of Rs 250-300 crore in the next financial year, given the kind of customers the company is onboarding, such as large banks coming to the WhatsApp platform.

Exclusivity Plays Critical Role
Gupta said that exclusivity would play a critical role in the growth of the company. “When we are exclusive with one operator, it means everything has to come through Route Mobile.”

This year, the company would focus more on how to work with operators to make sure it creates a “sticky” business for the long term, he said.

With that goal in mind, the firm plans to recruit another three–four large operators in the coming fiscal.

Gupta highlighted that Route Mobile closed a large deal recently with a Sri Lankan operator, which has the potential to churn revenue of Rs 130 crore over the course of two years. It is in talks with multiple operators as well.

Rising Digital Adoption To Benefit Margins
Increased digital adoption globally will aid the company’s margins, Gupta said.

Smartphone penetration, which is just 50% in India, will benefit Route Mobile’s new product line when it increases by 20-30% in the coming years, Gupta said. Bloomberg

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