HDFC Securities Places Buy On Midcap Stock, Set-to Trade Rs 3/Share Ex-Dividend On August 05

Telecom Sector Midcap company, Route Mobile Ltd. gets a Buy recommendation from HDFC Securities. The brokerage assigns Rs 1,725 per share target price of the stock of Route Mobile, claiming 16% potential upside.

The stock is set to trade ex-Dividend on Aug 05, 2023, for an interim Dividend of Rs 3/share of Rs 10 each for the financial year 2023-24.

"Declared the Interim Dividend of Rs. 3/- per equity share of Rs. 10/- each of the Company for the F.Y 2023-24," Board said in an exchange filing.

Change in guard; transition mode

According to HDFC Securities, Route reported a weak quarter with lower-than-expected revenue and margin performance. The revenue decline of 4.1% QoQ was impacted by seasonality and revenue loss due to consolidation in the industry (acquisition of ValueFirst and Kaleyra), offset by the ILD rate hike. The billable transactions increased 7.7% QoQ while realisations were down 10.9% QoQ due to a rise in NLD volume in the mix. There is a change in guard in Route mobile- Proximus group will be the new promoter and Route's ex-promoter will be the CEO of the combined entity's (Route + Telesign) CPaaS business. The proposed change will help Route to expand its international presence and become the third largest CPaaS player globally. The rate hike in the ILD segment, volume growth in NLD and rate hike, new client additions, and launch of new products like TruSense (identity and fraud detection) will aid growth for FY24E.

Buy For a Target Price of Rs 1,725

"We believe Route will be able to deliver ~20% organic growth in FY24E, following a strong FY23 (organic growth of 41%), led by tailwinds in the domestic termination business and expansion of international operations. We reduce our EPS estimate by 5/2% for FY24/25E due to 1Q miss and maintain our BUY rating with a TP of INR 1,725, based on 22x June-25E EPS. The stock is trading at 24/20x FY24/25E EPS (below its 1Y average)," the brokerage firm has said.

Stock Movement Since Date of Listing Listing

On Monday, the stock closed at Rs 1498.45 apiece, down 0.39% from its previous close. It traded 52-week-high at Rs 1,759.50 apiece and 52-week-low at Rs 1131 apiece, respectively.

The stock surged 0.54% in the past 1 week and 0.81% in the past 2 weeks, respectively. It declined 5.91% in the last 1 month, while it gained 18% in 3 months and 21.61% in 6 months, respectively. It gained 26.99% in 1 year and declined 27.37% in 2 years.

Disclaimer - The stock has been picked from the brokerage report of HDFC Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.