MobiKwik IPO creates buzz with 49 per cent GMP: Is it worth investing?
In this analysis, we take a closer look at One Mobikwik Systems Ltd and present you with the exclusive IPO details.
About the issue
One Mobikwik Systems Ltd is preparing to launch its Initial Public Offering (IPO) for equity shares. Below are the issue details.
| IPO Details |
| IPO Opening Date |
December 11, 2024 |
| IPO Closing Date |
December 13, 2024 |
| Issue Type |
Book Built Issue IPO |
| Face Value |
Rs 2 per equity share |
| IPO Price |
Rs 265 to Rs 279 per equity share |
| Min Order Quantity |
53 shares |
| Listing At |
BSE, NSE |
| Total Issue |
20,501,792 shares of FV Rs 2* |
| (Aggregating up to Rs 572 Cr)* |
| Fresh Issue |
20,501,792 shares of FV Rs 2* |
| (Aggregating up to Rs 572 Cr)* |
| QIB Shares Offered |
75% of the Offer |
| Retail Shares Offered |
10% of the Offer |
| NII (HNI) Shares Offered |
15% of the Offer |
| *At Upper Price Band |
|
Objects of the Issue
Since the offer is exclusively a fresh issue, it is noteworthy that the company will use the proceeds for its growth and expansion plans, rather than the funds flowing to promoters.
The company plans to allocate the net proceeds raised from the fresh issue for the following purposes:
- Funding growth in the financial services business.
- Funding growth in the payment services business.
- Investment in data, ML, AI, product and technology.
- Capital expenditure for the payment devices business.
- General corporate purposes.
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Promoter holding
Bipin Preet Singh, Upasana Rupkrishan Taku, Koshur Family Trust, and Narinder Singh Family Trust are the promoters of the company. The promoters currently hold a pre-issue shareholding stake of 32.87 per cent in the company.
Company profile
The company operates as a platform business, centred around a two-sided payments network that connects consumers and merchants. As of June 30, 2024, it has amassed 161.03 million registered users and onboarded 4.26 million merchants to facilitate online and offline transactions. The platform's value continues to grow as it expands its offerings across digital credit, investments, and insurance verticals, enhancing its appeal to both new and existing users.
The company offers a wide array of payment services, enabling consumers to:
-
Pay utility bills, including mobile recharges, electricity, and credit card payments.
-
Make purchases at online and offline merchants, such as retail stores and fuel stations.
-
Transfer money via phone numbers, UPI IDs, or bank accounts.
-
Check bank balances.
-
Scan QR codes to make payments using UPI or Rupay credit cards.
Key product highlights include:
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MobiKwik ZIP: A pay-later product offering a 30-day interest-free credit line.
-
MobiKwik Vibe (Soundbox): A QR-enabled payment announcement device for merchants.
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MobiKwik EDC Machine: A point-of-sale terminal that allows merchants to accept all in-person payment modes, including credit cards, debit cards, and UPI.
Financials
| Rs (in crore) |
FY22 |
FY23 |
FY24 |
Q1FY25 |
| Revenue |
543 |
561 |
890 |
346 |
| Profit before tax |
-128 |
-81 |
14 |
-6 |
| Net Profit |
-128 |
-84 |
14 |
-7 |
The company has demonstrated consistent success in growing its revenue, with FY24 standing out as an exceptional year, achieving approximately 60 per cent revenue growth while transitioning to profitability after significant losses in previous years.
Annualized figures from Q1FY25 highlight an impressive 56 per cent revenue growth compared to FY24; however, profitability concerns persist. The company faces substantial payment gateway costs and lending operational expenses. Nevertheless, these expenses could potentially decline as the company utilises issue proceeds to enhance its technology, driving greater efficiency.
Valuation & Outlook
| Company Name |
P/E |
P/B |
RoE (%)* |
| One Mobikwik Systems Ltd |
- |
3 |
9 |
| Listed Peer |
| One97 Communications Ltd |
- |
4 |
- |
*RoE: Based on FY24 data
The issue is priced with a P/BV ratio of 10.06 times, calculated using its Net Asset Value (NAV) of Rs 27.74 as of June 30, 2024. At the upper price cap, it is priced at a P/BV ratio of 2.97 times, considering its post-IPO NAV.
Considering the company's annualised FY25 earnings and fully diluted equity capital, the price-to-earnings (P/E) ratio is negative, reflecting the losses incurred during Q1FY25.
When compared to its listed peer, One97 Communications Ltd, the offering is relatively better priced and has the potential to deliver decent returns. One97 Communications, after several quarters of losses, achieved a significant turnaround with a profit of Rs 930 crore in the recent September quarter.
Similarly, One Mobikwik Systems Ltd transitioned to profitability in FY24, indicating the potential for continued success in FY25. While uncertainties remain, we recommend that risk-tolerant investors with surplus funds consider subscribing to the issue with a long-term perspective and a moderate allocation.