MobiKwik IPO creates buzz with 49 per cent GMP: Is it worth investing?

Mandar Wagh
/ Categories: Trending, IPO, IPO Analysis
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:

  1. Funding growth in the financial services business.
  2. Funding growth in the payment services business.
  3. Investment in data, ML, AI, product and technology.
  4. Capital expenditure for the payment devices business.
  5. General corporate purposes.

 

DSIJ's 'Value Pick' service recommends long-term stocks based on Value Investing Philosophy. If this interests you, do  download the service details here.

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:

  • 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.

  • 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.

Rate this article:
5.0

DSIJ MINDSHARE

Mkt Commentary11-Dec, 2024

Multibaggers11-Dec, 2024

Mindshare11-Dec, 2024

Penny Stocks11-Dec, 2024

SME11-Dec, 2024

Knowledge

MF15-Nov, 2024

General15-Nov, 2024

MF14-Nov, 2024

DALAL STREET INVESTMENT JOURNAL - DEMOCRATIZING WEALTH CREATION

Principal Officer: Mr. Shashikant Singh,
Email: principalofficer@dsij.in
Tel: (+91)-20-66663800

Compliance Officer: Mr. Rajesh Padode
Email: complianceofficer@dsij.in
Tel: (+91)-20-66663800

Grievance Officer: Mr. Rajesh Padode
Email: service@dsij.in
Tel: (+91)-20-66663800

Corresponding SEBI regional/local office address- SEBI Bhavan BKC, Plot No.C4-A, 'G' Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051, Maharashtra.
Tel: +91-22-26449000 / 40459000 | Fax : +91-22-26449019-22 / 40459019-22 | E-mail : sebi@sebi.gov.in | Toll Free Investor Helpline: 1800 22 7575 | SEBI SCORES | SMARTODR