One Mobikwik Systems IPO

Strong Network Effects: Mobikwik ecosystem connects end users, retail merchants, lending institutions and other partners, generating attractive networks effects that benefit all parties. With the BNPL Mobikwik Zip, users are able to make frequent and higher value purchases and refer more users. The retail merchant benefits from higher transaction values which encourages more merchants to join the network. This helps more user data into system, better credit scoring and lower NPAs, a win-win effect for all parties involved.

Low Customer Acquisition Cost (CAC): Mobikwik has low customer acquisition cost as they acquire users mainly through SEO, mobile ASO (application store optimization) initiatives, user referrals, POS placement at merchant checkouts etc. In Fiscal 2021, 77% of Registered Users were added organically without any cost. The CAC has come down from Rs. 13.39 in Fiscal '20 to Rs. 11.51 in Fiscal '21.

Strong Consumer Brand: Mobikwik brand is synonymous with digital payments and their users associate them with comprehensive digital payments offerings. The strong brand recall exists across small and big Indian cities due to brand presence across channels including ecommerce, physical, retail and bill payments.

Technology and Product First Approach: Company follows a digital-first and technology-powered approach towards making the products highly personalized, intuitive, simple to use and designed to drive high user engagement. They leverage deep data science including machine learning to continuously drive innovations.

Security Breach Risk: Their business generates and processes a large amount of personal data, including contact information, spending patterns, geolocation, financial information etc. through the transactions. Any security breaches and attacks against the platform, and any potential breach could damage company's reputation and adversely affect the business.

Intense Competition: The fintech industry is fast growing, highly innovative and competitive and increasingly subject to regulatory scrutiny. Increased competition could result in the need to change the pricing offered. If the company is not able to compete effectively and differentiate the offering to users and merchants, it may impact market share and business.

Credit Risk: BNPL products are relatively new and their credit-risk scoring algorithm is still evolving and may not accurately assess credit-risk and predict the credit losses as company scales up the BNPL segment. If the credit assessment falters, their lending partners may be hesitant to continue to partner with them.

Losses: Company has a history of losses, including in Fiscals 2019, 2020 and 2021. If the losses continue to increase, while they continue to grow at an accelerated rate, they may be unable to achieve profitability in near future.