MobiKwik IPO: Check price band, business model, risks and key financials ahead of December 11 launch

Payment platform One MobiKwik Systems Limited will launch its initial public offering (IPO) next week on Wednesday, December 11. The issue will remain open for subscription for three days till Friday, December 13.

Mobikwik IPO price band has been fixed in the range of ₹265 to ₹279 per share, with the lot size being 53 shares.

One MobiKwik Systems Limited aims to raise ₹572 crore through its maiden share sale. The IPO is going to be entirely fresh issuance of equity shares without any offer-for-sale (OFS) portion.

In case you are planning to invest in the MobiKwik IPO, take a detailed look at the company’s financials, business models, key competitors, and its strengths and weaknesses.

Business model

One MobiKwik Systems is a payments platform business at its core, offering digital payment services mainly to consumers and merchants.

MobiKwik has acquired 16.1 crore registered users and enabled 4.26 million merchants to make and accept payments online and offline, as of June 30, 2024.

Its operations are divided into two distinct businesses— payments and financial services.

Under these two divisions, MobiKwik offers various services like payments through wallet, UPI payments, pocket UPI, consumer credit, financial management products, recharge and bill payments, payment at online e-commerce and offline merchants, credit cards, peer-to-peer lending, distribution of mutual funds, digital gold and fixed deposits, among others.

Key strengths

MobiKwik as a brand is well-entrenched in the digital payments landscape and consumers associate the company with comprehensive digital payments offerings.

Also, due to the prominent visibility of MobiKwik at merchant point-of-sale across key metros, new consumers are encouraged to join the network.

One of MobiKwik’s latest offerings, Xtra, is witnessing considerable traction. It is a product through which the company facilitates peer-to-peer (P2P) lending by our consumers through its NBFC-P2P partner. Xtra has accumulated ₹1,834.8 crore in assets under management (AUM), as of June 30, 2024, within 26 months of its launch.

Key risks

MobiKwik’s operations are subject to regulation, oversight and inspection by the Reserve Bank of India (RBI), and any adverse observations, proceedings or notices from the central bank may affect its operations.

Also, security breaches and attacks against the platform, and any potential breach of or failure to otherwise protect personal, confidential and proprietary information, could damage MobiKwik’s reputation and materially and adversely affect its business, financial condition and results of operations.

Most importantly, the company faces intense competition, principally from other mobile payment companies, fintech companies, payment service providers, including commercial banks that issue payment cards or provide QR codes for payments, digital lending companies, including companies offering investment products and companies providing similar technology or distribution-driven financial services in India.

Competition

The company faces competition from major players across business segments. These include other players in the industry such as:

(i) Payments, bills and recharge: PhonePe, Paytm, Airtel Payments Bank, Freecharge, and others (ii) Lending: PhonePe, Paytm, Freecharge and Amazon Pay; (iii) Investments: PhonePe, Paytm and Freecharge

Key Financials

In terms of revenue, MobiKwik’s consolidated total income stood at ₹890.3 crore in FY 2023-24 compared to ₹561.6 crore in FY 2022-23 and ₹543.2 crore in FY 2021-22.

The company incurred losses amounting to ₹128.16 crore and ₹83.8 crore in FY 2021-22 and FY 2022-23, respectively. For the financial year 2023-24, the company achieved a profit of ₹14.08 crore.

It incurred losses of ₹6.6 crore in the first quarter of FY 2024-25 ending June 2024 on revenue of ₹345.8 crore during the period.

IPO Objective

One Mobikwik Systems Limited plans to utilise net proceeds from the IPO for expanding financial services business and payment service business for future growth. A portion of the funds will also be used for investment in data, ML and AI and product and technology. Funds will also be utilised for capital expenditure towards the payment devices business and general corporate purposes.