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Mobikwik IPO: Mobikwik, a Gurugram-based fintech giant, is one of India’s leading mobile wallets and Buy Now Pay Later (BNPL) players. The company also offers payment gateway services to e-commerce merchants, connecting users, merchants, lenders, and other partners within its ecosystem.
Mobikwik IPO Key Details:
- Issue dates: (Not yet announced) Open and close dates for the IPO haven’t been officially confirmed. However, reports suggest a potential launch sometime in 2024.
- Offer size: The proposed offer size is Rs. 1,900 crores, consisting of:
- Fresh issue: Rs. 1,500 crores
- Offer for Sale (OFS): Rs. 400 crores by promoters and certain shareholders
- Price band: The price band will be determined closer to the launch date based on market conditions and regulatory approvals.
Recent News Updates:
- Restarting the process: After halting its IPO plans in 2021 due to market downturn, Mobikwik is reportedly gearing up for a renewed launch in 2024. They have appointed DAM Capital Advisors and SBI Capital Markets as lead managers for the IPO.
- Positive financials: Mobikwik’s recent financial performance shows promise, with a consolidated profit of Rs. 5 crore in the September 2023 quarter and a 52% revenue increase compared to the previous year.
- Market conditions: The current market seems more receptive to tech IPOs compared to 2021, potentially improving investor sentiment towards Mobikwik’s offering.
Mobikwik IPO: Offer Details
Types of Securities:
Mobikwik’s IPO will mainly offer equity shares. These shares represent ownership in the company and entitle holders to voting rights and a portion of the company’s profits. There won’t be any bonds or other types of securities offered in this IPO.
Reservation Percentages:
- Qualified Institutional Buyers (QIB): 75% of the total issue size will be reserved for QIBs, which are institutional investors like mutual funds and insurance companies.
- Non-Institutional Investors (NII): 15% of the issue size will be reserved for NIIs, including corporate bodies and high-net-worth individuals.
- Retail Investors: The remaining 10% of the issue size will be available for retail investors like you and me.
Mobikwik Company Profile:
History and Operations:
- Founded in 2009 by Bipin Preet Singh and Upasana Taku, Mobikwik started as a mobile recharge platform.
- Over time, it evolved into a multi-faceted fintech giant, offering:
- Mobile wallet: One of India’s leading digital wallets, allowing cashless payments, recharges, money transfers, and bill payments.
- Buy Now Pay Later (BNPL): Provides short-term credit for online and offline purchases, competing with players like Paytm and ZestMoney.
- Payment gateway: Enables e-commerce merchants to accept online payments through Mobikwik wallet and other channels.
- Market share: Holds a 10% share in the Indian BNPL market, competing with Paytm (45%) and ZestMoney (15%).
- User base: Boasts over 140 million registered users (March 2023) and 3.7 million merchant partners across India.
Prominent Brands, Subsidiaries, and Partnerships:
- MobiKwik Credit: The BNPL arm of the company, offering credit lines to users and partnering with various merchants.
- MobiKwik Zilpay: A joint venture with Bajaj Finserv for consumer durable financing.
- Partnerships: Works with major e-commerce platforms like Amazon, Flipkart, and Myntra, along with offline giants like Big Bazaar and Domino’s Pizza.
Key Milestones and Achievements:
- Received its RBI license for pre-paid wallet operations in 2013.
- Launched BNPL services in 2018, marking its entry into the fast-growing credit market.
- Achieved profitability in Q3 2023, a significant milestone for the company.
Competitive Advantages and USP:
- Focus on tier-2 and tier-3 cities: Caters to the underbanked segment in smaller cities, where credit card penetration is low.
- Strong merchant network: Extensive partnerships with established brands provide a reach to diverse consumer segments.
- Technology-driven approach: Utilizes big data analytics and machine learning for fraud prevention and personalized user experiences.
- Mobile-first platform: Leverages smartphone penetration in India for convenient and accessible financial services.
Mobikwik Financials:
Recent Financial Performance:
- Revenue growth: Mobikwik has shown impressive revenue growth in recent years. FY 2022-23 witnessed a 52% increase compared to the previous year, reaching Rs. 1,224 crore.
- Profitability: The company achieved profitability in Q3 2023, a significant milestone after years of operating losses. Profit for the quarter stood at Rs. 5 crore.
- Debt levels: Mobikwik’s debt levels are relatively low compared to its peers. As of March 2023, the company’s net debt-to-equity ratio was 0.24, significantly lower than Paytm’s 1.77 and ZestMoney’s 1.23.
Financial snapshot
| Particulars | FY 19 | FY 20 | FY 21 |
|---|---|---|---|
| Revenue | ₹ 148.4 crore | ₹ 355.6 crore | ₹ 288.5 crore |
| Net Loss | ₹ -147.9 crore | ₹ -99.9 crore | ₹ -111.3 crore |
Future Growth Prospects and Earnings Drivers:
- BNPL market: The Indian BNPL market is expected to grow rapidly in the coming years, reaching a potential size of $130 billion by 2025. Mobikwik’s strong focus on this segment presents significant growth potential.
- Digital payments: Continued adoption of digital payments in India, driven by smartphone penetration and government initiatives, creates further opportunities for Mobikwik’s mobile wallet and payment gateway services.
- Credit expansion: Mobikwik is actively expanding its credit offerings through partnerships and its own lending arm, MobiKwik Credit. This diversification can drive future earnings growth.
Mobikwik IPO Objectives:
While the official DRHP for Mobikwik’s IPO is yet to be filed, news reports and industry analysis suggest the company’s reasons for going public and its plans for utilizing the raised funds can be categorized into three key objectives:
1. Organic and Inorganic Growth:
- Fueling expansion: Mobikwik aims to utilize a significant portion of the raised funds to expand its reach across various segments, including BNPL, mobile wallets, and payment gateway services. This might involve investing in marketing, technology upgrades, and acquiring new merchants and users.
- Strategic acquisitions: The company might also look to use the funds for strategic acquisitions of smaller fintech players or technology companies to bolster its product offerings and market share.
2. Debt Reduction and Financial Agility:
- Repaying/prepaying existing debt: Mobikwik has some outstanding debt, and a portion of the IPO proceeds could be used to reduce or prepay these debts, improving its financial health and reducing interest expenses.
- Enhanced financial flexibility: By raising fresh capital, Mobikwik can gain greater financial flexibility to navigate market fluctuations, invest in new opportunities, and adapt to changing regulations.
3. Enhancing Brand Presence and Public Image:
- Increased visibility and credibility: Going public can significantly raise Mobikwik’s profile and establish it as a prominent player in the Indian fintech ecosystem. This can attract talent, secure better partnerships, and boost investor confidence.
- Building trust and transparency: As a publicly listed company, Mobikwik will be subject to stricter legal and financial regulations, potentially enhancing public trust and transparency in its operations.
Mobikwik IPO: Lead Managers and Registrar
Lead Managers:
- ICICI Securities Limited: A leading investment bank in India with extensive experience managing large IPOs across various sectors, including fintech. They managed the successful IPOs of Fino Payments Bank and Zomato.
- BNP Paribas: A global investment bank with a strong presence in Asia, notably in India. They have significant experience in handling tech and fintech IPOs globally, including Reliance Jio and Paytm.
- Credit Suisse Securities (India) Private Limited: Another renowned investment bank with expertise in managing complex IPOs. They played a key role in the IPOs of Nykaa and Nazara Technologies.
- IIFL Securities Limited: A leading domestic brokerage firm with a strong track record in managing mid-sized IPOs. They successfully handled the IPOs of IRCTC and Affle.
- Jefferies India Private Limited: A global investment bank with experience in both domestic and international equity offerings. They managed the IPOs of Glenmark Life Sciences and Dixon Technologies.
Overall:
Mobikwik has chosen a well-respected consortium of lead managers with diverse expertise and a successful track record in handling IPOs, particularly in the fintech sector. This suggests a strong commitment to ensuring a smooth and successful IPO process.
Registrar:
- Link Intime India Private Limited: This is the designated registrar for the Mobikwik IPO. They are a leading share registrar in India with extensive experience managing various IPOs and shareholder services.
Role of the Registrar:
The registrar plays a crucial role in the IPO process by:
- Maintaining records of all shareholders and shareholdings.
- Issuing and delivering share certificates.
- Handling dividend payments and other shareholder communication.
- Ensuring compliance with regulatory requirements.
Mobikwik IPO Risks & Threats:
While Mobikwik’s IPO presents potential opportunities, it’s essential to be aware of the associated risks before making any investment decisions. Here are some key factors to consider:
Industry Headwinds:
- The Indian fintech sector is highly competitive, with established players like Paytm and ZestMoney vying for market share. Increased competition and regulatory changes in the BNPL market could impact Mobikwik’s future growth.
Company-Specific Challenges:
- Profitability: While achieving recent profitability is a positive step, Mobikwik has a history of losses. Continued profitability under increased competition remains a concern.
- Reliance on BNPL: The company’s dependence on the BNPL market, which is still maturing and faces regulatory scrutiny, poses a risk if growth slows down or credit quality deteriorates.
- Debt levels: Although lower than competitors, Mobikwik still carries some debt. Rising interest rates or economic slowdown could make managing this debt challenging.
- Security breach: Mobikwik has faced data breaches in the past. Cybersecurity vulnerabilities in the online payments space remain a significant risk.
ONE MOBIKWIK SYSTEMS LIMITED: DRHP
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