Route Mobile stock slips 7% after board clears share buyback

Shares of Route Mobile fell nearly 7 per cent today after its board approved the proposal of buyback of equity shares of the company. The buyback worth Rs 120 crore will be carried out at a price of Rs 1,700 per share. The buyback price is 27.94 per cent higher than the previous close.

However, shares of Route Mobile were trading in the red today. Route Mobile stock plunged 6.93 per cent to Rs 1,236.65 against the previous close of Rs 1328.70 on BSE. Market cap of the firm fell to Rs 7,895 crore on BSE.

The stock opened with a loss of 5.17 per cent at Rs 1,260 today. Total 0.35 lakh shares of the firm changed hands amounting to a turnover of Rs 4.40 crore on BSE. In a filing on the Bombay Stock Exchange on June 28, the company said that its board had approved Rs 120 crore spend to buy back share from shareholders barring promoter, promoter group, and persons in control of the company.

 Punit Patni, Equity Research Analyst, Swastika Investmart said, "Route Mobile has been a prey of the huge sell-off in the tech stocks globally, falling 50 per cent  from its 52-week price. Post the buyback announcement, the stock has tanked 7 per cent due to the open offer mode and the small size of the buyback program. The company is the largest CPaaS (Communications platform as a service) based out of India and is the largest in Asia, Africa, and the Middle East in terms of connectivity and customers, and is poised to grow substantially in the future as the CPaaS demand is increasing due to its cost advantages and ease of scaling up. Thus, we are positive about the company from a long-term perspective and the current correction provides a good entry point."

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At maximum buyback price (Rs 1,700), and maximum buyback size (Rs 120 crore), the indicative maximum number of equity shares bought back would be 705,882, 1.12% of the total number of paid-up equity shares of the company.

"The Buyback shall not exceed the Maximum Buyback Size, which represents 9.95% and 7.31% of the aggregate of the total paid-up equity share capital and free reserves of the Company based on the latest audited standalone and consolidated financial statements of the Company as on March 31, 2022, respectively," Route Mobile said in the filing.

A cloud communications platform service provider, Route Mobile's clientele includes enterprises, over-the-top (OTT) players, and mobile network operators. Its portfolio includes solutions in messaging, voice, email, SMS filtering, analytics, and monetisation, with a client base across segments such as social media companies, banks, financial institutions, e-commerce entities, and travel aggregators.