Stock To Buy: Invest In This Services Sector Stock For 25% Return, Interim Dividend: Anand Rathi

Anand Rathi has assigned buy rating to the stock of Route Mobile Ltd with a target price of Rs 1644 apiece. If you buy Route Mobile at the current market price of Rs 1313 apiece, you will get potential return of 25%.

Revenue from operations grew by 94.1% from Rs. 4,357 million in Q2 FY22 to Rs 8,458 million in Q2FY23. There was a sequential growth of 16.0%, billable transactions increased from the 10.8 billion in Q2FY22 to around 24.8 billion in Q1FY23 to 26.9 billion in Q2FY23. Average realization per billable transaction increased from 0.294 paisa in Q1FY23 to 0.314 in Q2FY23.

1. Route Mobile Stock Outlook & Return

The current market price of the stock is Rs 1313 apiece with an intraday dip of 1.02% on BSE. The stock's 52-week high is Rs 1947 apiece and 52-week low is Rs 1052 apiece, respectively. The small cap company has a market capitalisation of Rs 8219 crore.

2. Route Mobile Financial Outlook

EBITDA margin expanded from 11.8% in Q1FY23 to 12.9% in Q2FY23. Adjusted profit for tax grew by 102.9% from Rs. 454 million in Q2FY22 to Rs. 921 million in Q2FY23. as compared to Rs. 872 million in Q1FY23.

Adjusted PAT margin was 10.9% in Q2FY23. For H1FY23, revenue from operations grew by 93.7% from Rs 8,132 million in H1FY22 to Rs 15,749 million in H1FY23. In terms of certain KPI, billable transactions increased from 18 billion in H1 FY22 to 52 billion in H1FY23. The company had a staggering net revenue retention of 128.0% and added over 350 new customersin the six months across all products.

3. Route Mobile Interim Dividend & Buyback

Route completed its Rs1,200 million buyback through open market channel in Q2FY23. Buyback amount including taxes is Rs1,492million. Board has also approved interim dividend of Rs3 per share.

4. Route Mobile Valuation

According to Anand Rathi, "The company's clear growth strategy, deep customer focus and robust technology platform are tuned to deliver strong and sustainable performance year after year. We have revised our EPS estimates, We believe as the company is invested in Chile, Mexico, and Brazil which is key market growth for Route mobile within Latin will be going to benefit from FY23 onwards. We remain positive on medium-term growth prospects; its trading at 30x FY24E EPS. We maintain 'BUY' rating on the stock with revised TP of Rs.1,644."

About The Company

Route Mobile offers mobile communication solutions. It provides text messaging, voice calling, number lookups, firewall, email, and other related services. 

Disclaimer

The stock has been picked from the brokerage report of Anand Rathi. 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 check with certified experts before taking any investment decision.