Highlights
| Issue Size: 20,501,792 shares | Issue Open/Close: 11 Dec / 13 Dec, 2024 |
| Price Band (Rs.): 265 – 279 | Issue Size (Rs.): 5,270 mn |
| Face Value (Rs): 2 | Lot Size (shares): 53 |
One MobiKwik Systems Limited (MobiKwik), incorporated on March 20, 2008, is a comprehensive financial services platform offering a two-sided payments network connecting consumers and merchants. With a technology and product first approach, the company delivers scalable and innovative solutions, achieving high user engagement, evidenced by a 93 pct repeat usage rate for its flagship product, MobiKwik ZIP. As of Q1FY25, the platform had grown to 161 mn registered users, driven by an efficient user acquisition strategy with a low Customer Acquisition Cost (CAC).
MobiKwik has established a pan-India presence through its digital-first approach, transitioning from a payments-centric enterprise to a diversified multi-product platform in financial services. Its unified platform consolidates and analyses consumer financial data using advanced analytics and machine learning. This enables the company to offer personalized financial solutions tailored to users’ financial behaviours, needs, and aspirations across verticals like digital credit, investments, and insurance.
The company operates a synergistic two-sided network where consumers and merchants drive mutual growth. An expanding consumer base benefits merchants through increased spending, while the addition of merchants broadens transaction opportunities for users, further lowering CAC. The integration of digital credit with payments enhances engagement, increasing transaction frequency and consumer lifetime value, thereby strengthening the overall ecosystem.
With a consistently low CAC, MobiKwik recovers acquisition costs quickly while having a cautious approach to credit approvals, minimizing risks. Its technology-driven platform, supported by highly rated mobile applications, underpins its ability to scale profitably. The company’s commitment to delivering value-driven and accessible financial products has cemented its position as a trusted and growing player in the financial services landscape.
Out of the total proceeds of Rs. 5,270 mn, Rs. 702.8 mn would go towards for capital expenditure (capex), Rs. 1,500 mn to support its financial services business, and Rs. 1,350 mn for its payment services. Additionally, Rs. 1,070 mn will be allocated to research and development, with the remaining funds earmarked for general corporate purposes.
Key Risks
- India’s consumer internet industry expected maintain a high growth trajectory, eventually reaching USD 600 bn+ by FY28. The overall Indian e-commerce market is expected to become USD 190-200 billion by FY28. On consumer payments, Redseer estimates that wallet transaction value will reach approximately 70-75 bn in FY28P.
- MobiKwik focus on providing a seamless digital payments experience has helped them build a large and loyal customer base. They offer products like MobiKwik ZIP and ZIP EMI that facilitate consumer credit, making it easier for users to make purchases and manage payments. They also have a reward system where users earn MobiKwik SuperCash on transactions, which can be redeemed for discounts and other benefits. This drives customer engagement and retention, especially through targeted offers and promotions.
- Although MobiKwik primarily operates online, they are expanding their presence across digital touchpoints to reach new customers. The company continues to penetrate tier-2 and tier-3 cities, where digital adoption is increasing. The aim is to drive growth through both urban and rural areas, improving access to financial services for a wider population.
- Their approach of putting technology at forefront of products have helped them create products for consumers that achieve scale through the value they provide to the consumers who use them, therefore allows them to acquire consumers at extremely low cost.
- MobiKwik primarily acquire users through (i) SEO and mobile ASO initiatives; (ii) user referrals from a large user base; (iii) brand recall from checkout and POS placement in diversified merchant network; (iv) high usage of the BBPS platform; and (v) marketing and publicity. This has enabled Them to maintain a low CAC per New Registered User at Rs. 32.87 in FY24.
- MobiKwik’s key strategy includes (i) Scaling existing products (ii) Expanding product portfolio in existing business lines (iii) Expansion of their payment aggregator business and (iv) Continuous focus on profitable growth.
- Sales of the company has grown by 28.90 pct YoY over FY22-24 to Rs. 8750 mn. While EBITDA of the company came into profit to Rs. 372 mn in FY24 from loss of Rs. 559 mn in FY23 with EBITDA margin of 4.18 pct in FY24. During FY24, the company reported profit of Rs. 141 mn against the loss of Rs. 838 mn in FY23.
Key Risks
- MobiKwik’s operations are subject to regulation, oversight and inspection by the RBI, and any adverse observations, proceedings or notices from the RBI may affect their business.
- Slowdown in the growth of their Active Users can adversely affect their business.
- The company depend on Zaakpay’s services for payments services and Financial Services business, specifically, MobiKwik ZIP and ZIP EMI, and any disruption in its services may adversely affect the business.
Financial Performance
| (In Rs. mn, unless otherwise stated) | FY22 | FY23 | FY24 | Q1FY25 |
| Revenue from operations | 5,266 | 5,395 | 8,750 | 3,423 |
| EBITDA | -1,154 | -559 | 372 | 22 |
| EBITDA Margin % | -21.24% | -9.97% | 4.18% | 0.64% |
| Profit | -1282 | -838 | 141 | -66 |
| Payments Take Rate % | 2.39% | 1.23% | 0.83% | 0.68% |
| Financial Take Rate % | 6.46% | 5.57% | 6.14% | 7.28% |
| Digital Credit GMV | 15,122 | 51,150 | 90,934 | 23,467 |
| Payment GMV | 1,79,474 | 2,07,250 | 3,81,955 | 2,50,802 |
| Registered Users | 124 | 140 | 156 | 161 |
| No. of Merchants | 3.6 | 3.74 | 4.06 | 4.26 |
Peer Comparison Based on FY24
| (In Rs. mn, unless otherwise stated) | MobiKwik | One 97 Comms. Ltd | Affirm Holdings Inc. | PayPal Holdings Inc. |
| Revenue from operations | 8,750 | 99,780 | 1,85,839 | 23,84,000 |
| EBITDA | 372 | -3,599 | -49,268 | 4,02,240 |
| EBITDA Margin % | 4.18% | -3.61% | -26.51% | 16.89% |
| Profit | 141 | -14224 | -41421 | 339680 |
| Payments Take Rate % | 0.83% | 0.34% | NA | 1.76% |
| Financial Take Rate % | 6.14% | NA | NA | NA |
| Digital Credit GMV | 90,934 | 5,23,900 | 3,60,000 | 40,320 |
| Payment GMV | 3,81,954 | 1,83,00,000 | 21,28,000 | 12,24,00,000 |
| Registered Users | 155.84 | 300+ | 18.7 | 391 |
| No. of Merchants | 4.06 | 40.6 | 0.3 | 35 |
Valuation
MobiKwik is India’s leading digital banking platform, offering a wide range of financial products for both consumers and merchants, including payments, digital credit, and investments. MobiKwik focused on providing the unserved Indian population their first access to credit. Their mission is to build world-class financial products for Bharat. At the upper end of the price of Rs. 279, the issue quotes post issue Price to sales of 2.62x on FY24 sales. The issue looks appears to be fully priced. One can subscribe this issue from a longer-term perspective.
Also read: Why Is Financial Advisory Important?
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