Arihant Capital has given Accumulate recommendation for Route Mobile with a target price of Rs. 2585 in its research report issued on Oct 19, 2021

Arihant Capital’s research report on Route Mobile

Route Mobile Limited reported strong set of numbers in Q2FY22 and were above our estimates on all front. Revenue from operation grew by 24.7% YoY & 15.4 % QoQ to INR 4357 mn above our estimate of INR 4152 mn. UK was the top contributor in the company’s overall revenue followed by India, Dubai, Nigeria and others. The company’s segment revenue from the UK stood at INR 2918 mn India contributed INR 1059 mn, Dubai INR 637 mn, Nigeria 293 mn and othersINR 106 mn EBIDTA grew by 34% YoY and 23% QoQ to INR 561 mn above our estimate of 477 mn EBIDTA margin expanded by 91 bps YoY & 82 bps QoQ to 12.9% Healthy top line growth coupled with better operational efficiency led to expansion in margin. Reported PAT grew by 28.7% YoY and 22.7% Q0Q to INR 421 mn above our estimate of 374 mn. PAT margin expanded by 30 bps YoY and 58 bps QoQ to 9.7%. Decline in other income and increase in finance cost impacted PAT margin to some extent.

Outlook

We value the stock at a P/E multiple of 65 (x) to its FY23 EPS of INR 39.8 to arrive at a target price of INR 2585 and maintain accumulate rating on the stock.

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