Investors have long been in the dark about the latest happenings in the IPO market, but recent developments have surely sprung some excitement. Mobikwik an Indian fintech company that has been growing tremendously is a strong candidate in the IPO race. Let’s get into whether or not this is a business worth investing into by describing the company further and detailing the IPO look like.
Mobikwik’s Business at a Glance
Established in the year 2008, Mobikwik is one of the prominent digital payment companies in the Indian business ecosystem. The company operates in:
Introduced Prepaid Digital Wallets – This service enables users to utilize their prepaid accounts to pay bills and even credit card payments.
UPI Services – This service enables the user to transfer funds, check their bank balance and even purchase items through online and offline purchasing methods from retailers.
Merchant And E-commerce Services – This service allows merchants to combine card payments with QR code scans and soundboxes.
As of June 30th 2024 the company has amassed a huge customer base standing at a total of 161 million users and 4.26 million merchants giving the company a diverse range of opportunities in growing.
Mobikwik is a company based out of India which has diversified its services throughout the country. Its progress and strength in the economy of the country is important to be understood through financial reviews and reports. This understanding will also aid investors in curating strategies to deal with IPOs. Let’s take a closer look:
First off, it is important to understand MobiKwik’s revenue. This company had a steady revenue growth at ₹543 crore during the beginning of the fiscal year 2022 which then grew to ₹890 crore by the same period in FY23. Their projected revenue growth by the 4th quarter in FY24 is estimated to be greater than ₹1,000. This steady incline in revenue showcase a healthy growth potential.
Looking at the bigger picture, MobiKwik reported historical losses and was running in the negative when they were in FY24 – where they reported a ₹14 crore profit. But even with a slight gain, they still managed to fail the Q1 of FY24 as they reported a loss of ₹65 crores. Adjusting to the growing economy is hard and maybe a loss was inevitable. But this loss still goes on to showcase the profitability status of MobiKwik growing further.
The understanding of assets and liabilities is an intricate part of ensuring growth remains steady. Total assets increased to ₹854 crore which indicate strong growth. Borrowings it seems were also within manageable parameters set for a fintech entity which again indicates that growth was ensured while losses were avoided.
These strong financial indicators of MobiKwik portray their overarching vision to grow while remaining balanced in their profitability.
Moving on, The MobiKwik IPO will be available to the users starting December 11, 2024 up till December 13th. The expected listing will be on December 18 2024, and the issue sailing will be between ₹279 to ₹280.
Goals: The Money will help scale up in fintech services, Product Expansion and Business General Expenses.
A certain point of interest is that there is no Offer for Sale (OFS), which means that the existing promoters are not encashing any of their stakes, which is a good sign for long-term shareholders.
Market Proficiency and Competitive Advantages
Mobikwik has a number of competitive advantages in regard to being involved with fintech:
Brand Recognition: Users and merchants have developed reputation for us.
Technology Capability: Implementation of codes for payment, soundbox and UPI linkage among others.
Wided Product Offering: Appealing to residential, end-users as well as business merchants on payment and credit solutions.
Operational Efficiency: Reduce costs in the management of loans and payment processing services.
But even with inherent strengths, there are problems like the increasing competition from the likes of Paytm, PhonePe etc.
GMP Appraisal
For the time being, Mobikwik’s IPO is selling at a 120 INR GMP which is 43% higher it’s upper price band. This would normally reflect a good market sentiment but a friendly warning to investors, GMP is all speculative means hence volatile. Past performance history indicates that GMP trends can vary quite widely, rendering performance only investment unreliable.
Considering Investing? You Must Read This
Given below are some pointers for all those willing to invest in Mobikwik:
Short Term Investment
Mobiwik has a strong GMP of 18% which indicates strong gains at the time of the initial public offering. However, there are fluctuations in the market all the time, and nothing is guaranteed.
Long Term Investment
At the moment, Mobikwik is not making any profits. But the trend of revenue growth is above 30%, and with patience, the company should be able to turn into profit, making it a good candidate for investors who can wait.
Investing in Mobikwik Can Pay Off
Taking a look at a company’s post listing performance and its results on a quarterly basis should provide an answer to this.
What are the Risks?
Market Competition: The market for the fintech is already saturated and competition is quite intense.
Profitability Issue: Gaining traction and being profitable will be critical in gaining traction in the market.
To Conclude with
The Mobikwik IPO is definitely worth waiting for, but it has its pros and cons. There are strong points like revenue growth and Mobikwik being a fintech pioneer, but these have to be balanced with the risks. Whether you would wish to jump in for short term or long term, it is extremely important to do your homework well and make sure your objectives match.
Keep monitoring trends, act rationally and see the value that the IPO of Mobikwik has in all probability to offer.
