Route Mobile sets the right tone, but valuations aren’t cheap

Route Mobile Ltd investors can hardly complain. The cloud communication platform service provider has seen stellar appreciation in its stock price since the listing on the bourses in September 2020. The issue price during the initial public offering (IPO) stood at ₹350 apiece. On Friday, its shares closed at ₹1,525.50 on the National Stock Exchange. That’s a stunning 336% jump.

The surge in Route’s shares suggests investors are likely factoring in continued high earnings growth momentum in the near to medium term. “Valuations are not cheap. But note that some of the global peers are also trading at premium valuations due to accelerated digitization trends owing to covid that benefited the CPaaS industry,” said an analyst requesting anonymity. CPaaS is communications platform as a service.