Route Mobile promoters to sell majority stake to Proximus

Route Mobile's share price increased by 8%. Yes, a leading cloud communication platform provider, experienced a significant surge of over 8% on the National Stock Exchange (NSE) as the stock hit its 52-week high of ₹1,759.90 on Monday.

The surge was triggered by an announcement from the company stating that its promoters would be selling their entire shareholding. The promoters plan to sell their 36.41 million shares, representing a 57.16% stake, to Proximus Opal SA at an average price of ₹1626.40.

The total value of the deal is estimated at Rs 5922.41 crore. Following this transaction, Proximus will also make a 26% open offer to the public at the same price. However, later in the day, the stock retraced its gains and entered negative territory as investors decided to book profits.

In an agreement, Proximus Group entered into a deal to acquire a majority stake of 57.56% in Route Mobile through Proximus Opal. The acquisition is valued at an initial amount of ₹5,922.4 crore, which is equivalent to approximately EUR 643 million.

The acquisition price per share has been set at ₹1,626.40. Indian regulations stipulate that this acquisition will trigger a mandatory takeover offer for an additional 26% of the outstanding shares, which will also be priced at the same per-share price.

Following the acquisition, some of the founding shareholders of Route Mobile will reinvest approximately EUR 299.6 million into Proximus Opal, in exchange for up to 14.5% of its shares. 

Route Mobile had its initial public offering (IPO) in September 2020, raising around ₹ 600 crore. The IPO was priced at ₹350 per share. Since its listing, the stock has surged over 400%.

In the fiscal year 2022-2023, Route Mobile reported revenue of ₹3569.20 crore, indicating a growth of 78.3% compared to the previous fiscal year's revenue of ₹2002 crore. The net profit for the fiscal year stood at ₹333.10 crore, reflecting a 96% increase from Rs 170.1 crore in the previous year.

The company's EBITDA margin improved to 12.5% in FY23 from 10.9% in FY22. The total debt for the fiscal year was recorded at ₹106.15 crore, compared to zero debt in the previous year.

The company's management expressed optimism about its market position in India and expects its current market share of 20% to grow to approximately 25% in FY24. They emphasized that this expansion would be supported by additional revenue generated from specific large banks, some of which have already contributed in the fourth quarter.