Mobikwik, a leading fintech company in India, recently concluded its Initial Public Offering (IPO), marking a significant milestone in its journey. The IPO, which opened for subscription on December 11 and closed on December 13, 2024, saw overwhelming demand from investors across categories. Here’s a comprehensive look at the IPO’s key details, performance, and implications for the future.
Overview of the Mobikwik IPO
The Mobikwik IPO aimed to raise ₹572 crore through a fresh issue of equity shares, priced in the range of ₹265 to ₹279 per share. The minimum lot size was fixed at 53 shares, making it accessible to retail investors. The public offering garnered immense interest, and the robust subscription numbers reflect the market’s optimism toward Mobikwik’s growth potential.
On its final day, the IPO was oversubscribed 119.38 times, receiving bids for 141.72 crore shares against the 1.18 crore shares on offer. This stellar performance is a testament to Mobikwik’s strong brand presence, market leadership, and strategic positioning in the rapidly growing fintech sector.
Subscription Highlights
The demand across investor categories was impressive:
- Retail Investors: The retail portion was subscribed 134.67 times, showcasing strong participation from individual investors.
- Qualified Institutional Buyers (QIB): The QIB segment witnessed a subscription rate of 119.50 times, driven by large institutional players recognizing the company’s potential.
- Non-Institutional Investors (NII): This category recorded a subscription rate of 108.95 times, indicating significant interest from high-net-worth individuals and corporates.
These figures underscore the broad appeal of the Mobikwik IPO, attracting interest from both retail and institutional investors alike.
Financial Performance
Mobikwik’s financials have been pivotal in building investor confidence. The company demonstrated consistent growth and achieved profitability in FY24, a significant turnaround from its earlier loss-making years. Key financial highlights include:
- Revenue Growth: Revenue grew at a compound annual growth rate (CAGR) of 29% between FY22 and FY24, reaching ₹875 crore.
- Profitability: The company achieved profitability at both the EBITDA and PAT levels, with a 4.2% EBITDA margin in FY24.
- Payment GMV: The gross merchandise value (GMV) for payments increased at an annual rate of 45.88%, reflecting robust transaction volume growth.
- MobiKwik ZIP GMV: The GMV for MobiKwik ZIP (disbursements) surged by 112.16% annually from FY22 to FY24, driven by a growing customer base and increased transaction activity.
Mobikwik’s focus on maintaining operational efficiency is evident from its low employee cost-to-revenue ratio, which ranks among the best in the industry.
Market Potential and Growth Strategy
Mobikwik operates in a rapidly expanding digital payments and financial services market. The addressable market in FY23 was estimated at USD 5.3 billion and is projected to grow to USD 16-18 billion by FY28. Factors driving this growth include:
- Rising internet penetration
- Increased disposable incomes
- Greater digital adoption across urban and rural areas
- Growing awareness of digital financial products
Mobikwik’s growth strategy focuses on diversifying its product portfolio and addressing underserved markets. Approximately 72% of its digital loan disbursements are targeted at Tier 3+ cities, bridging the financial gap for millions of consumers. This emphasis on inclusion positions Mobikwik as a key player in democratizing access to modern financial services.
Product Innovation
Innovation has been a cornerstone of Mobikwik’s success. The company continues to expand its offerings to cater to diverse customer needs. Key products include:
- MobiKwik Wallet: A flagship product that facilitates seamless digital payments for consumers and merchants.
- MobiKwik ZIP: A credit line product offering instant credit to users for purchases.
- Merchant Solutions: Including soundboxes, point-of-sale (POS) devices, and Merchant Credit Advances (MCA), these solutions enhance merchant retention and recurring revenue.
- Wealth Management Services: Assets under administration (AUA) grew significantly, from ₹323.68 crore in FY22 to ₹6,692.85 crore by June 30, 2024.
These innovations have helped Mobikwik build a loyal customer base, with a repeat usage rate of over 90%.
Grey Market Premium (GMP) and Valuation
The grey market premium (GMP) for Mobikwik’s shares was a strong indicator of investor sentiment. On the final day of bidding, the GMP rose to ₹158 per share, representing a 59.14% premium to the IPO price of ₹279. This suggests robust demand and the potential for strong listing gains.
At the upper price band, the IPO was priced at a price-to-book value (P/BV) of 3x and a market cap-to-sales ratio of 2.4x. Analysts have noted that this valuation is reasonable compared to peers like Paytm, which trades at higher multiples. This competitive pricing contributed to the high subscription rates.
Analyst Reviews
The Mobikwik IPO received positive reviews from market analysts, who highlighted the company’s growth trajectory, profitability, and innovative product offerings.
- Nirmal Bang: Recommended a “Subscribe” rating, citing Mobikwik’s operational efficiency, strong consumer loyalty, and scalable business model.
- Eureka Broking: Praised the reasonable valuation and highlighted Mobikwik’s focus on adding new services like investment and insurance.
- Lemonn Markets Desk: Commended Mobikwik’s strategy to drive growth through innovation and diversification.
However, some analysts also cautioned that the IPO might be suitable only for high-risk investors, given the competitive fintech landscape.
Comparative Analysis with Peers
Mobikwik competes with several established players in India’s fintech space, including Paytm and PhonePe. While Paytm is larger in scale, Mobikwik has carved a niche with its focus on profitability and efficient customer acquisition costs (CAC). Mobikwik’s CAC of ₹32.87 is among the lowest in the industry, enabling sustainable growth.
Moreover, Mobikwik’s market share of 24% in the PPI (Prepaid Payment Instruments) wallet segment underscores its leadership in this category.
IPO Implications for the Fintech Sector
The success of the Mobikwik IPO is a positive signal for the broader fintech sector in India. It reflects growing investor confidence in digital-first companies with scalable operations. As digital payments and financial services continue to gain traction, companies like Mobikwik are well-positioned to benefit from this trend.
Key implications include:
- Increased investor appetite for fintech IPOs.
- Greater emphasis on profitability and operational efficiency among startups.
- Enhanced focus on addressing underserved markets.
Future Outlook
Mobikwik’s journey post-IPO will be closely watched. The company plans to use the IPO proceeds to fuel growth, enhance its technology platform, and expand its product offerings. Key focus areas include:
- Credit and Lending: Further scaling MobiKwik ZIP to cater to the growing demand for credit.
- Merchant Solutions: Expanding the merchant ecosystem with advanced tools.
- Wealth Management: Strengthening its presence in the investment and insurance segments.
With a strong foundation and clear growth strategy, Mobikwik is well-equipped to navigate the challenges of the competitive fintech landscape.
Conclusion
The Mobikwik IPO has set a new benchmark in the fintech space, showcasing the company’s potential and investor confidence. Its success reflects the broader shift toward digital financial services in India. As Mobikwik embarks on the next phase of its journey, its ability to innovate, scale, and adapt to market dynamics will determine its long-term success.
For investors, Mobikwik offers an exciting opportunity to be part of a high-growth, digital-first company shaping the future of financial services in India.
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