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This TECH STOCK can be a POTENTIAL MULTIBAGGER from SMALLCAP in 2022. Best STOCK to Buy now from IT? - YouTube
Channel: StockAdda with Janak
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Always keep 3 factors in mind to evaluate a multibagger stock
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1 How are the existing business and financials
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2 It the stock in an industry which is in megatrend or tailwind
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3 What is the business visibility in the stock for future ?
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We are going to evaluate a Tech Stock from small cap on this principles
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To find out if this is a multibagger or not
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We will also check the valuations in the end
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To see if this is expensive or reasonable at current share price
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Which is the stock, we will find out shortly ?
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The stock that we are going to discuss provides cloud communication to companies
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We are going to discuss about route mobile stock
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The segment which they cater to is call Communication Platform as a service
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They basically give a digital spin & AI conversation to all popular medium of engagements like email, sms, text etc
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These kind of companies also have very good operating leverage
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For increasing additional slaes beyond a limit you dont have to incur additional much cost
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Most of the increase in sales goes directly into the profit
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58% of their revenues come from the geography of UK
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Total 80% is from export and there is a geo concentration risk here
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But it will interesting to keep an eye on geo expansion in the future of this company
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Their services are industry agnostic
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means enterprises from varied industries need to digitise their communications
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They have varied clientele from e commerce, travel, edtech and bfsi
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Now as far as scoring this stock is concerned
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I will give it 9/10 on its existing business
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Let us understand why did I choose route mobile or RML in 1st place ?
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Route Mobile share has corrected a lot from 2300+ to levels of 1700+
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This is almost a correction of 26%
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But is it the main reason. Absolutely no
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There is still a lot to discuss
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Reason 2 to evalute RML is that it belong to CPassS space which is currently of size $8.7 Bn
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By 2026 it is projected to be of $30Bn+
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This comes at an annualised growth rate or more than 30%
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Let us have a look at reason 3
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Covid has lead to a big tech disruption with work from home
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There is a need of streamlining a very good conversation mechanism across the organization for it
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This megatrend is going to benefit companies like route mobile limited
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Let quickly have a look at the financials of RML
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This stock has shown consistent higher double digit growth from last 5 years
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Their ROCE is 30%+ and CROIC is 22%+
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Ample cash on the books with minimal debt
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Make it very strong financially and hence I score it
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10/10 here...
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Let us talk about the future of Route Mobile Ltd
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We discussed at 2:50 in this video about the industry growth
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of 30% CAGR which is our 1st big indicator
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2nd is a big reason on transformation
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They are moving from CPaaS to CxPass, where Cx stands for Customer experience
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Customer experience is a huge unexplored area in tech
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If RML master Customer experience digitisation, it can be the game changer
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Clients now realise that customer experience does not stop with sales, but there is big after sales and has to be 5 star
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Growth guidance of 20% in FY22 by management is again a promising sign to see
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Let me reveal a secret here. How do I analyse all these stuff ?
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I use news articles, concalls, annual reports etc
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Concall reading is a huge art, how to find important points and relevant parameters
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This i am going to teach in my upcoming Fundamental Analysis batch
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This batch starts from 3rd of Jan'22
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Incase if you miss a lecture, dont worry the recordings will be available on the app too for revisit
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All the detailed information including the pricing is
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mentioned in the description and the comments
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Now coming back to Route Mobile's future againg
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They are not only growing organically, but targeting
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inorganic opportunities, i.e acquisitions for growth too
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Example of their recent acquisitions include
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Masiv company which caters to geography of LATAM
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With inter teleco they are expanding to Kuwait
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With Send clean they are expanding their product reach in email
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With such a strong business visibility but with some buffer I will rate it
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9/10
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Now let us look at the valuations and find out
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If it is expensive or fairly valued
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Disclaimer: All content of this channel are for educational purposes only and not a recommendation in any form
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Please consult your financial advisor before any investment decision
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For Valuations I compared the multiples of Route mobile to similar cohort of companies like
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Tanla, Affle, Latentview and KPIT
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This was again encouraging as its multiples were mostly less than average, though not much significantly
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On absolute terms it has PE>70 and PB>14
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which I find on the higher side to be honest
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But it is an excellent story like KPIT Stock
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which I have covered in this video
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Check that out if that is a multibagger too ?
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