Route Mobile share price doubles at stock market debut; stock opens at 105% premium to IPO price

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September 21, 2020 10:15 AM

Route Mobile shares skyrocketed on the stock market debut today and traded at a price of Rs 708 per share, a premium of Rs 358 on the upper band of the issue price of Rs Rs 345-350 per equity

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Route Mobile shares skyrocketed on the stock market debut today and traded at a price of Rs 708 per share, a premium of Rs 358 on the upper band of the issue price of Rs Rs 345-350 per equity. The stock was listed on the BSE at a price of Rs 708 per share. Route Mobile scrip got listed at Rs 717, a 104.86 per cent premium over its issue price of Rs 350 on NSE. Route Mobile was trading at a premium of Rs 312 per share in the grey market ahead of opening. The Rs 600-crore Route Mobile IPO received a good response, subscribing over 74 times on the final day of the bidding. Non-Institutional Investors (NII) had bid the most for the stock.

The cloud communications service provider, which was open for subscription from September 9-11, in the price band of Rs 345-350, received bids for over 89 crore shares as against the total issue size of 1.21 crore shares. At the end of the three-day bidding process, Qualified institutional buyers (QIBs) category was subscribed 91 times, while non-institutional investors (NIIs) subscribed their portion 195.61 times. The retail individual investors (RIIs) garnered 12.85 times subscription. The Mumbai-headquartered company amassed Rs 180 crore from anchor 15 investors before the issue opened for subscription. The IPO included a fresh issue of Rs 240 crore and offer for sale (OFS) of up to Rs 360 crore.

In the last five months, a lot of new retail investors have come into the market. Hemang Jani, Head – Equity Strategy, Broking & Distribution, Motilal Oswal Financial Services Ltd said that since there had not been any lucrative IPO opportunities since March, so retail investors participated heavily in these recent IPOs. They were attracted by a strong grey market premium which has the potential to give substantial listing gains. Further, the recent IPOs so far were good offers that came after a long time. “With the rising interest in midcaps and small caps, investors were on the look-out for new ideas to invest in and these IPOs provided them the same,” he added. In addition, Jani also said that with interest rates being very low, and the grey market premium running high, it provided a lucrative opportunity for retail investors to participate in these IPOs.

Research and brokerage firm Motilal Oswal Financial Services in an IPO note highlighted that at the higher end of the price band, the issue is valued at 29x FY20 P/E (fully diluted), which is comparable to mid-sized IT firms (no listed peers available). It further stated that Route Mobile has a strong presence in the niche CPaaS market with high entry barriers and healthy financials. “Further given the small offer size and presence in niche IT space, one may get listing gains too,” it said.

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