Mon Dec 16 07:10:08 UTC 2024: **MobiKwik IPO Oversubscribed, Focus on Lending Drives Growth Amidst Payment Platform Competition**
MUMBAI, INDIA – MobiKwik’s initial public offering (IPO) has concluded with phenomenal oversubscription, exceeding expectations by a significant margin. Retail investors led the charge, oversubscribing the IPO by approximately 135 times. This strong investor interest signals substantial market buzz surrounding the fintech company.
Unlike many Indian IPOs that include an offer for sale (OFS), MobiKwik is uniquely reinvesting all proceeds into business expansion. This strategy differentiates it from recent offerings by Hyundai and LG India, which saw promoters selling shares.
MobiKwik’s operations are divided into payments and financial services. While the payments business, known for its wallet, UPI, and BNPL offerings, saw revenue decline from ₹428.9 crore in FY22 to ₹317.1 crore in FY24, its financial services arm—primarily lending through MobiKwik ZIP and ZIP EMI—experienced explosive growth, increasing from ₹97.6 crore to ₹557.8 crore during the same period. This dramatic shift underscores MobiKwik’s strategic focus on lending for future growth.
Although MobiKwik boasts over 150 million users and four million merchants, its payment transaction volume pales in comparison to giants like PhonePe and Google Pay. To counter this, MobiKwik plans to increase its merchant base by deploying 25,000 EDC machines and 600,000 soundboxes, aiming to compete with Paytm’s established market share in this area. This expansion is expected to enhance merchant relationships and open opportunities for merchant lending.
The company’s loan book currently stands at ₹2,383 crore, with plans to invest ₹150 crore to expand lending further. MobiKwik’s strategy also emphasizes growth in Tier 2 and Tier 3 cities, where it enjoys lower customer acquisition costs and high user repeat rates. The company’s lending products, including MobiKwik ZIP and ZIP EMI, as well as exploring products like loans against mutual funds (LAMF), contribute significantly to its growth strategy.
MobiKwik is currently valued at ₹2,200 crore, showing impressive revenue growth of over 40%, projecting ₹1,250 crore revenue this year. However, the company is not yet profitable, making future returns heavily reliant on successful execution of its ambitious expansion plans. While the current price-to-sales ratio of 2.5x presents potential for investors, compared to industry peers like Paytm and PayPal, success hinges on its ability to efficiently scale its operations and convert its extensive user base into sustainable revenue streams. Potential investors are advised to consult with financial advisors before making any investment decisions.
First Piper 