India's fintech space is gaining traction in the initial public offering (IPO) market.
Recently, two fintech companies Paytm and Policybazaar raised funds worth Rs 239 bn. Now another fintech company is ready to make its debut.
MobiKwik, one of India's largest mobile wallets and Buy Now Pay Later (BNPL) players, is set for its IPO.
The total issue size of the IPO will be Rs 19 bn. Of this, Rs 15 bn will be a fresh issue while the remaining Rs 4 bn will be an offer for sale.
The category wise details along with the dates are yet to be announced. The book running lead managers of the IPO are ICICI Securities, BNP Paribus, Credit Suisse, IIFL Securities, and Jefferies India. Link Intime India is the registrar of the issue.
The company plans to use the funds collected through the issue for organic growth initiatives, inorganic growth, and general corporate purposes.
MobiKwik (formerly known as One MobiKwik Systems) is a fintech company and is among the largest mobile wallets in India.
The company was incorporated in 2009 as a mobile wallet with the aim to make digital payments easy.
It later expanded its presence to bill payments, online and offline retailers, money transfers through UPI, bank transfers, etc.
In 2012, it also launched an online payment gateway called Zaakpay.
Recently, the company ventured into credit services to take advantage of the low credit card penetration in India.
It launched a BNPL product called MobiKwik Zip that combines fast-growing mobile payments with the benefits of credit.
Through this product, the company aims to offer credit services to the middle class by offering credit up to Rs 30,000 at zero cost for paying bills, shopping, and much more.
MobiKwik has a customer base of over 101 m registered users and over 3 m in billing, retail, and ecommerce partners.
The company also recently received unicorn status as it reached a valuation of US$1 bn. This came after a secondary sale of an employee stock options plan (ESOP) to employees.
In the last three years, MobiKwik's revenue growth has been quite unstable.
The company's revenue declined 18.3% year on year (YoY) in financial year 2021 while it increased more than 100% YoY in the financial year 2020.
However, the number of registered users has increased consistently. The company has seen an increase of 22.2% in registered users in the year 2021. In 2020, the number of registered users increased 29.3%.
The company's expenses have also been unstable. In financial year 2020, total expenses increased 50% while in 2021, they fell 11%.
Overall, the company has incurred losses in the past three fiscal years. Its net loss margins have also been over 20%.
Rs m | 2018-2019 | 2019-2020 | 2020-2021 |
---|---|---|---|
Revenue | 1,602 | 3,699 | 3,023 |
Revenue Growth % | 130.80% | -18.30% | |
Expenses | 3,021 | 4,545 | 4,041 |
Net Profit | -1480 | -999 | -1,113 |
Net Profit Margin | -92.30% | -27.00% | -36.80% |
EPS | -31 | -20 | -22 |
Net worth | -16 | -309 | -200 |
Total borrowings | 864 | 765 | 605 |
Registered Users (m) | 64 | 83 | 101 |
Customer Acquisition Cost (Rs) | 9.4 | 13.3 | 11.5 |
For more details, check out MobiKwik Systems Red Herring Prospectus.
In its State of Indian Economy report, the Reserve Bank of India (RBI) said that 2021 could be India's year of IPOs.
And it sure seems like it.
So far, India has seen close to 45 IPOs, and 20 more IPOs are expected to hit the market in 2021.
These IPOs have raised over Rs 660 bn as of October 2021. This number is expected to reach Rs 1 tn by the end of the year.
So, is the sizzling IPO market just a bubble?
Loss-making firms are rushing to get listed in the market with pricy valuations. Investors are equally enthusiastic about participating in this IPO mania.
One of the main reasons investors are rushing to participate in the IPO market is to get hold of the tech companies in India. With rapidly evolving technology, investors believe these firms can be the next big tech giants in India.
But only time can tell how these loss-making firms will evolve in the future.
If you are participating in this IPO mania or contemplating it, make sure you understand what you are doing.
Take a look at the company's financials and understand the business before taking the leap.
Happy Investing!
Equitymaster requests your view! Post a comment on "MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing.". Click here!
Comments are moderated by Equitymaster, in accordance with the Terms of Use, and may not appear
on this article until they have been reviewed and deemed appropriate for posting.
In the meantime, you may want to share this article with your friends!