Launching Dec 11, Mobikwik aims to raise ₹572 crore with a price band of ₹265-₹279 per share
One Mobikwik Systems, the Gurugram-based digital payments platform, is set to launch its initial public offering (IPO) on December 11, 2024. The IPO, open for bidding until December 13, has created buzz in the market, with the company aiming to raise ₹572 crore through the offering. With a robust business model and a promising financial turnaround, Mobikwik’s IPO is poised to attract significant attention from institutional and retail investors.
Key Details of the Mobikwik IPO
IPO Dates: December 11 to December 13, 2024
Price Band: ₹265-₹279 per share
Lot Size: Minimum 53 equity shares and multiples thereafter
IPO Size: ₹572 crore (entirely fresh issue)
Face Value: ₹2 per share
Listing: Proposed on BSE and NSE
Allocation of Shares
The IPO has a well-structured allocation strategy:
Qualified Institutional Buyers (QIBs): 75% of the issue size
Non-Institutional Investors (NIIs): 15% of the issue size
Retail Investors: 10% of the issue size
This distribution aims to balance institutional interest with retail participation, ensuring a broad investor base for the company.
Utilization of IPO Proceeds
Mobikwik plans to use the net proceeds from the IPO to fuel growth in its payment services and financial services businesses. The funds will also support investments in advanced technologies like data analytics, machine learning (ML), and artificial intelligence (AI). Additionally, capital will be allocated for product innovation, technology enhancement, and expansion of payment devices. General corporate purposes will also be funded.
Business Model and Operations
Mobikwik operates a platform-based business with a two-sided payment network that connects consumers and merchants. The platform offers a variety of payment and financial services, including:
Online Checkout: A seamless payment experience for e-commerce customers.
Kwik QR Scan and Pay: A quick and easy QR-based payment solution.
MobiKwik Vibe (Soundbox): A sound-based payment confirmation device for merchants.
MobiKwik EDC Machine: Point-of-sale devices for card-based payments.
Merchant Cash Advance: Financial assistance for businesses to meet short-term capital requirements.
The company’s subsidiary, Zaakpay, focuses on B2B payment gateway services, catering to e-commerce businesses. With approval from the Reserve Bank of India (RBI) for its Payment Aggregator (PA) business, Mobikwik has strengthened its position in the payments ecosystem.
Financial Performance
Mobikwik recently reported its first-ever full-year profitability in FY24, a milestone after 15 years of operating losses. Key highlights include:
Profit After Tax (PAT): ₹14.08 crore in FY24, compared to a loss of ₹83.81 crore in FY23.
Revenue from Operations: ₹875 crore in FY24, a significant increase from ₹540 crore in FY23.
This financial turnaround demonstrates the company’s ability to achieve profitability while maintaining strong revenue growth, instilling confidence in its business model.
Industry Position and Market Opportunity
The Indian digital payments market has witnessed exponential growth, driven by increasing smartphone penetration, government initiatives, and the shift towards cashless transactions. Mobikwik’s focus on financial inclusion positions it as a key player in this evolving landscape.
With a user base of millions and partnerships with numerous merchants, Mobikwik has built a strong ecosystem. Its diverse offerings, including consumer payments, merchant solutions, and financial services, provide multiple revenue streams and reduce dependency on a single source.
The company’s emphasis on underserved populations in India aligns with its mission to enhance financial inclusion, creating a strong market niche.
Strengths of the IPO
Proven Turnaround: Mobikwik’s profitability in FY24 marks a critical milestone, showcasing its ability to achieve sustainable growth.
Diverse Revenue Streams: The platform leverages multiple services, ensuring stability and resilience in revenue generation.
Strong Technology Backbone: Investments in AI, ML, and advanced data analytics enhance operational efficiency and user experience.
Regulatory Approval: RBI’s approval for the Payment Aggregator business strengthens its credibility and market position.
Expanding Market: The growing adoption of digital payments in India provides significant growth opportunities.
Challenges and Risks
Competitive Market: Mobikwik faces intense competition from established players like Paytm, PhonePe, and Google Pay. Maintaining market share will require continuous innovation and customer retention efforts.
Regulatory Risks: Operating in a highly regulated sector, the company must navigate compliance challenges effectively.
Reliance on Merchant Network: A significant portion of revenue depends on merchant transactions, making diversification critical.
Macroeconomic Factors: Global economic uncertainties and domestic market fluctuations could impact business performance.
Comparison with Peers
Paytm, another prominent player in the digital payments space, recently made its IPO debut but struggled to sustain its valuation due to high losses and unclear profitability timelines. In contrast, Mobikwik’s profitability and focused business model provide a differentiated narrative.
Other competitors like PhonePe and Google Pay dominate the Unified Payments Interface (UPI) segment, but Mobikwik’s unique offerings like Merchant Cash Advance and Zaakpay position it in niche segments with growth potential.
Growth Prospects
Mobikwik’s investments in technology and data-driven solutions indicate a commitment to staying ahead in the competitive market. The company’s focus on merchant-centric solutions, coupled with its profitability, sets a strong foundation for future growth.
Additionally, its ability to innovate and adapt to changing market dynamics, such as the introduction of the MobiKwik Soundbox and EDC Machine, showcases its agility and customer focus.
Key Takeaways for Investors
Mobikwik’s IPO presents an opportunity to invest in a company that has demonstrated a strong financial turnaround and a clear path to sustainable growth. Its profitability, diversified business model, and positioning in a growing digital payments market make it a compelling choice for both institutional and retail investors.
However, investors must consider the competitive landscape and regulatory environment before making decisions. A clear understanding of the company’s long-term strategy and ability to scale will be critical in evaluating its potential.
Mobikwik’s IPO represents a significant moment for the company and the Indian digital payments industry. Its journey from years of losses to profitability highlights the strength of its business model and strategic vision. As the company gears up for its public debut, it aims to solidify its position in a highly competitive market while driving financial inclusion and technological innovation.
For investors, Mobikwik’s IPO offers a balanced proposition with promising growth prospects and manageable risks, making it one of the most anticipated IPOs of the year.
