One Mobikwik Systems Limited, the parent company of the popular digital payments platform MobiKwik, has made headlines again with its renewed plans for an initial public offering (IPO). It submitted the DRHP for the second time to SEBI in January this year and is set to raise ₹700 crore instead of the initial ₹1,900 crore.
The company first gave the draft red-herring (DRHP) prospectus for a ₹1,900-crore IPO to SEBI in July 2021. The IPO, with a face value of ₹2, consists solely of new equity shares and does not include any offer-for-sale component.
Mobikwik IPO details
| Offer Price | Yet to announce |
| Face Value | ₹ 2 per Share |
| Opening Date | Yet to announce |
| Closing Date | Yet to announce |
| Total Issue Size (in Shares) | Yet to announce |
| Total Issue Size (in ₹) | ₹ 700 Cr |
About Mobikwik
MobiKwik is a major player in the Buy Now Pay Later (BNPL) space, offering credit to customers for online purchases. Additionally, it provides payment gateway services, allowing transactions between merchants and users. With over 100 million users and 3.4 million merchant partners, MobiKwik has built a strong digital ecosystem.
Growth Story
MobiKwik was one of the best in 2023 in the allocation efficiency of digital financial products and services. During that fiscal year, it achieved a revenue of 6.64 rupees for every rupee invested in marketing. This performance metric exceeds Paytm, Groww, Phonepe, and Fino Payments Bank.
Operational Revenue Up as Company Narrows Losses
The company’s past year saw an upward trend in operational revenue, demonstrating a healthy increase. Despite facing challenges, there was a significant improvement in financial performance, with losses shrinking by a notable percentage compared to the previous year. This positive trajectory suggests promising future prospects for the company.
Here are 7 points from the DRHP that investors may find important:
- IPO size: MobiKwik aims to raise ₹700 crore through its IPO, with a possibility of a pre-IPO placement for an additional ₹140 crore. The initial IPO size was reduced from ₹1,900 crore to ₹700 crore, and updated documents were submitted to SEBI after the refiling.
- Allocation of funds from the IPO proceeds: ₹250 crore for financial services expansion, ₹135 crore for payment services, ₹135 crore for technology investments, ₹70.28 crore for payment devices, and general corporate purposes.
- IPO share reservation: 75% for Qualified Institutional Buyers (QIB), 15% for Non-Institutional Investors (NII), and 10% for Retail Investors.
- MobiKwik’s flagship application has added over 18.29 million users annually between Fiscal 2021 and September 30, 2023, offering digital payment options, credit, investments, and insurance.
- Peers in the IPO include One 97 Communications Ltd (listed), Affirm Holdings, Inc., and PayPal Holdings, Inc. (global peers).
- Promoters of MobiKwik include Bipin Preet Singh, Upasana Rupkrishan Taku, Koshur Family Trust, and Narinder Singh Family Trust.
Let’s understand it better by a SWOT analysis:
| STRENGTHS | WEAKNESSES |
| Enjoys strong brand recognition in India. Presence in BNPL offers revenue diversification and growth potential. A large user base and strong merchant network enable smooth transactions. | MobiKwik’s profitability struggles cast doubt on its future. Competitive Indian fintech landscape threatens growth. Evolving rules in fintech puts its path at risk. |
| OPPORTUNITIES | THREATS |
| Accelerated digitization promises wider reach and bigger volumes. Well-positioned to tap into the explosive growth of BPNL. Strategic partnerships and acquisitions can facilitate growth and diversified offerings. | Economic slowdown Security threats and user privacy issues. Surging Fintech space threatens its established footprint. |
MobiKwik’s IPO carries higher risks due to its lack of profitability and strong competition. However, its strong brand, diversified portfolio, and favorable market trends could offer a potential for future growth. Investors must carefully weigh the risks and rewards before making a decision.
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I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
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