My views on route mobile after watching DHANDHA: ROUTE MOBILE by Varinder Bansal.
First of many thanks to Varinder Bansal for this initiative,
You tube link . https://www.youtube.com/watch?v=1Ar7Zqfx68o&t=1s
This is not complete analysis but my views after watching DHANDHA: ROUTE MOBILE by Varinder Bansal. I hold Route Mobile and I have some exposure to Route Mobile ltd in my portfolio . My avg price is around Rs 1150 but exposure is very limited.
Some has doubts about moat in the company products. After watching this webinar, I think the company product does not have a strong moat but the company has a strong moat because of its relationship with telecom providers over the years. This is my view anyone can disagree.
The main feature of the product is to send email or SMS. Sending an email is not a complex task anyone can build a product around it. In fact, most of computer programming languages provides APIs for it. But, sending SMS is a little bit tricky. But, there are so many APIs presents that can send SMS. If you just search "send global SMS api" you will get huge list of companies. So, copying this product is not difficult. However, as per management, they have built-in some AI and Big Data Solution behind the scene which decides the best and cheapest route for sending SMS. It can also be easily built. It's not very difficult to make a similar product for a company that is already sending emails/SMS as OTP in their solution for example Infosys Finacle, Tech Mahindra, Sasken, or Intellect Design. Products can easily add SMS functionality using these APIs or built their own. Of course , they will have to handle NFRs(Non Functional Requirements) and products desirable Quality Attributes like Functional suitability, Reliability, Operability,Performance efficiency, Security, Compatibility, Maintainability ,Transferability and so on . Product can be build but they cannot build this relationship with global operators in 1-2 years. Especially companies like Infosys will avoid it while Tech Mahindra or Sasken can try their luck given opportunity size in CPaaS. Becoming a global player will time consuming process, that is the moat for ROUTE MOBILE. Will they able to beat on rates offered to ROUTE MOBILE? It will be difficult.I have not done much research on existing competition threat.
Even though product level moat is weak but there is a huge addressable market ($25 Billion by 2025). ROUTE MOBILE is one of the leaders in this space. So, the good portion of pie will go to them. It is like anyone can make a product like Nestle Maggie. But, it is hard to beat Nestle and grab market share from them. Now, Marico is trying their luck.
ROUTE MOBILE has the following advantages.
- ROUTE MOBILE provides a Global solution. Most of the MNCs want A one-stop solution. When MNC player will float RFP, ROUTE MOBILE will be the preferred choice and they are already having big giants as their reference customer.
- ROUTE MOBILE has strong relationship with telecom providers, they can leverage it to cross-sell the other products to them, for example, they have already started to selling Firewall solutions to them.
- ROUTE MOBILE is one of the cheapest providers as per the discussion in the webinar.
I think ROUTE MOBILE is also lucky(serendipity) they entered 15-16 years back in such a product which does not require a lot of new features regularly. It is just sending SMS or Email or nowadays messages to App. So, there is not much scope for adding new features or pressure from the competition. Most of the other IT product companies are involved in a rat race for new features development and feel pressure from competition for adding new features. Because of this their product development cost increase, every year and they are not able to make sufficient profit.
ROUTE MOBILE business is like toll bridge business like IEX(Indian Energy Exchange Ltd
), they generate revenue on traffic and same time product require little reinvestment. The company can generate good free cash that can be utilized for acquisitions, developing new cross-salable products, or even dividends.
IT is a very rapidly changing field but these types of product are going to be relevant even after 10 years. The reason is multi factor authentication requirement for security. Most of critical transactions like banking requires multi factor authentication . It means authentication from more than one channel. Multiple-channel Authentication (MCA) is a method of Multi-Factor Authentication where one or more of the Authentication Factors involved are communicated over separate communication channels or protocols. It mitigates the ripple effect of compromised credentials, even if someone has stolen your password by Web channel but he can't hack your OTP sent by SMS channel. Another option to use a physical token which also not convenient. Right now, I don't see any other alternative to distribute OTP over SMS.
As per my personal opinion, Even though the product has a weak moat but the company has moat due to cost, relationship with telecom operator, experience in the field, and offering a global solution.
No comments:
Post a Comment