Is Mobikwik IPO Good or Bad - Detailed Review

One Mobikwik Systems Limited is kicking off its initial public offering which will be open from December 11, 2024, to December 13, 2024. While considering applying for this IPO, certain questions may arise in your mind, some of which include whether Mobikwik IPO is good or bad, whether it is worth investing in this IPO, and so on. 

This article provides a detailed review of this IPO, diving into its business operations and fundamental analysis to help you make a well-informed investment decision.

Company Overview of Mobikwik IPO

One MobiKwik Systems Limited, co-founded by Bipin Preet Singh and Upasana Taku, is a leading digital financial services platform in India with a strong focus on leveraging technology to drive financial inclusion.

The platform offers a wide range of payment solutions, including the MobiKwik Wallet, UPI, cards, and its flagship buy-now-pay-later product, MobiKwik ZIP. These services allow consumers to pay utility bills, shop with ease, and transfer money. At the same time, merchants benefit from a range of tools such as QR codes, Soundbox, and EDC devices which simplify payment collection and enhance their operational efficiency.

As of June 30, 2024, MobiKwik boasts 161.03 million registered users and has enabled 4.26 million merchants to process payments both online and offline.

Furthermore, MobiKwik has also established itself as a significant player in financial services by partnering with leading lending institutions to offer credit solutions like MobiKwik ZIP, ZIP EMI (personal loans), and Merchant Cash Advance. The platform has further diversified its offerings into investment and insurance products, creating a comprehensive ecosystem for its users’ financial needs.

Financial Overview of Mobikwik IPO

The below image provides an overview of the revenue and cost drivers of the company:

Source: RHP of the company

The financials of One Mobikwik Systems Limited show that the company’s revenue has increased from Rs.543.21 crores in FY22 to Rs. 890.31 crores in FY24. This steady rise was majorly contributed by the company's financial service segment which accounted for 63.76% company’s revenue in FY24.

Furthermore, the company showcased a significant turnaround from losses reported in FY22 and FY23 to a net profit of Rs. 14.08 crores in FY24. This was primarily a result of increased revenue growth in the company when compared to its overall expense growth.

While the company has managed to achieve profitability, its ROE for FY24 stood at 8.66%. This indicates that the company has generated poor returns on the shareholder's capital.

Strengths of One Mobikwik Systems IPO

• The company leverages technology to create innovative, value-driven products, enabling low-cost customer acquisition, and high engagement (90.3% repeat usage for MobiKwik ZIP).

• The company has built a large and engaged consumer base, of 161.03 million registered users by June 30, 2024, while maintaining a low customer acquisition cost (CAC) of Rs 32.87 in FY24 through SEO, ASO, referrals, brand visibility, and targeted marketing efforts.

• The company has efficiently managed its operational costs for its digital credit products which has resulted in a consistent decline in lending-related expenses over the past three financial years.

Strategies of One Mobikwik Systems IPO

MobiKwik plans to scale products, expand into merchant credit, AI tools like Lens.ai, and new offerings like credit on UPI and co-branded cards. By targeting large revenue pools in credit, payments, insurance, and wealth management, the company aims to achieve sustainable growth and strengthen its fintech leadership.

Risk Factors of One Mobikwik Systems IPO

• The company operates under strict regulatory oversight, where adverse rulings from the RBI could impact its business activities.

• The company’s heavy reliance on lending partners for financial services. Any disruptions in these partnerships can adversely affect the business of the company.

• The absence of credit ratings may limit the company’s access to funding which can impact the company’s future growth plans.

• The company faces intense competition in the fintech industry. Failure to compete effectively in the market could adversely impact the company’s business.

Industry Overview of Mobikwik IPO

India's consumer internet industry is projected to sustain its strong growth momentum, with estimates suggesting it could exceed USD 600 billion by FY28. The Indian e-commerce sector is also anticipated to expand significantly, reaching a valuation of USD 190-200 billion by the same year.

In the consumer payments domain, Redseer predicts that wallet transaction values will grow to approximately USD 70-75 billion by FY28, underlining the increasing adoption of digital payment platforms.

The digital credit market has witnessed substantial growth, with the total value of loans disbursed rising by 41% from USD 5.8 billion in FY21 to USD 11.6 billion in FY23. By FY28, digital channels are expected to contribute around 4% of total retail lending, showcasing the growing influence of technology-driven lending solutions.

One Mobikwik Systems Vs Peers

Below is the table showing a comparison of One Mobikwik Systems with companies considered as peers in the RHP:

Source: RHP of the company

While Mobikwik is the smallest company compared to its peers, it stands out among its peers with a positive EPS of Rs 2.46 and RoNW of 8.66% which is second only after PayPal. This positions Mobikwik favorably in the competitive fintech market.

Objective Of Mobikwik IPO

The company shall use the net proceeds from the fresh issue of the IPO for the following purposes:

• To Fund the company’s organic growth in the financial services business 

• To Fund the organic growth in the payment services business

• For the research and development in data, ML and AI, and product and technology

• To facilitate the capital expenditure for the payment devices business

Mobikwik IPO Details

IPO Date

Mobikwik IPO is open to subscription from December 11, 2024, to December 13, 2024. The shares will be allocated to investors on December 16, 2024, and the company will be listed in the NSE and BSE on December 18, 2024

IPO Issue Price

Mobikwik IPO is offering its shares in the price band of Rs.265 to Rs.279 apiece. This means you would require an investment of Rs.14,787 per lot (53 shares) if you are bidding for the IPO at the upper price band.

IPO Size

The Mobikwik IPO is offering a total of 20,501,792 shares, amounting to Rs. 572 Crores which be entirely through a fresh issue

IPO GMP

Many investors look at the Grey Market Premium (GMP) before applying for Mobikwik IPO. The GMP gives an idea of market sentiment and can hint at the possible listing price. However, it should be noted that it does not reflect how financially strong Mobikwik is. Thus, it is important to financially analyze the stock before investing in it.

IPO Allotment Status

The shares from One Mobikwik Systems Limited will be allotted to its investors on December 16, 2024. One can check the allotment status for the IPO from its registrar Link Intime India Private Limited, the BSE website, or your broking platform where you have applied for the IPO.

IPO Application Link

Open a demat account with Rupeezy today and enjoy a seamless experience when applying for the IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free. Click on the apply link below to get started.

Apply for One Mobikwik Systems IPO

Is Mobikwik IPO a Good or Bad Investment? Final Thoughts

Mobikwik IPO Review: Mobikwik Limited demonstrates a robust user base, steady revenue growth, and a successful transition to profitability. Furthermore, its strategic plans to expand into merchant credit, AI tools, and new financial products position it well in the growing digital financial services market. 

However, potential investors should carefully weigh concerns such as the modest return on equity, regulatory risks, dependence on lending partners, and intense industry competition before deciding to invest in this IPO.

For those interested in investing in such IPOs, you can open a demat account with Rupeezy. Our trading platform allows you to participate in various investment opportunities including initial public offerings.