Route Mobile slips 7% after board approves share buyback via Open Market

Route Mobile board has approved the buyback of equity shares having face value of Rs 10 at a price not exceeding Rs 1,700 per equity share and for an aggregate amount not exceeding Rs 120 crore

Shares of Route Mobile dipped 7 per cent to Rs 1,236.65 on the BSE in Wednesday's trade, falling 10 per cent in two trading days, after the board approved share buyback via Open Market.

Earlier, the stock had bounced back 24 per cent in three days (till Monday), from its 52-week low level, after the company announced that its board would consider share buyback on June 28. It had hit a 52-week low of Rs 1,052.60 on June 23, 2022.

"The company's board approved the buyback of equity shares having face value of Rs 10 at a price not exceeding Rs 1,700 per equity share and for an aggregate amount not exceeding Rs 120 crore, from the shareholders of the company, payable in cash via the 'Open Market' route through the stock exchanges mechanism," Route Mobile said in a exchange filing.

The buyback of shares excludes promoters, promoter group and persons who are in control of the Company, it said.

In an open market buyback, the company purchases shares directly from the market at the then prevailing price. The primary objective of a share buyback programme is to arrest the fall in the value of a stock by reducing the supply of the stock, which essentially pushes up the share price through a better price to earnings (P/E) multiple.

Despite of recent run-up, the stock of the other telecom services provider has slipped 28 per cent over the past six months, as compared to 8.7 per cent decline in the S&P BSE Sensex.

Route Mobile is a cloud communications platform service provider, catering to enterprises, over-the-top (OTT) players and mobile network operators (MNO). The company’s portfolio comprises solutions in messaging, voice, email, SMS filtering, analytics and monetization.

Tech outlook

Resistance: Rs 1,377

Support: Rs 1,161

After clocking a sharp bounce back since June 22, shares of Route Mobile are seeing profit booking. With today's fall, the stock has slipped below its 20-day moving average (20-DMA) at Rs 1,295 on the daily charts. It's immediate downside support now stands at Rs 1,161, as per the weekly charts.

If the stock is able to reclaim the 20-DMA, the upmove may propel the stock back towards its 50-DMA of Rs 1,377, and then Rs 1,478 (100-DMA).

The stock's price-to-moving average action suggests a negative trend, while momentum oscillators such as Directional Index and Slow Stochastic indicate sluggish moves ahead.

(With inputs from Nikita Vashisht)