Recently, two fintech companies Paytm And Policybazaar raised the amount 239 Billion Now another fintech company is ready to debut.
MobiKwik, one of India’s largest mobile wallet and Buy Now Pay Later (BNPL) players, is gearing up for its IPO.
The total issue size of the IPO will be 19 billion of this, 15 bn will be a fresh issue while the rest 4 bn will be an offer for sale.
Category-wise details along with 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.
purpose of the issue
The company plans to use the funds collected through this issue for organic growth initiatives, inorganic development and general corporate purposes.
MobiKwik. About this
MobiKwik (formerly known as One MobiKwik Systems) is a fintech company and one of the largest mobile wallets in India.
The company was incorporated in 2009 as a mobile wallet with the aim of making digital payments easier.
Later it expanded its presence to bill payments, online and offline retailers, money transfer through UPI, bank transfer etc.
In 2012, it also launched an online payment gateway called Zakpay.
Recently, the company forayed into credit services to take advantage of the low credit card penetration in India.
It launched a BNPL product called MobiKwik Zip which combines fast-growing mobile payments with the benefits of credit.
Through this product, the company aims to . To provide credit services to the middle class by offering credit up to 30,000 at zero cost for bill payments, shopping and more.
MobiKwik has over 101 million registered users and over 3 million across billing, retail and e-commerce partners.
The company recently gained unicorn status as it reached a valuation of US$1 billion. This comes after the secondary sale of an employee stock option plan (ESOP) to employees.
Company’s main strength
MobiKwik is India’s largest mobile wallet and one of the BNPL players in India. The company enjoys a large user base with low cost of conversion.
It has a strong network in the business vertical. Growth in end users, merchants, lending partners or banks will ultimately benefit all stakeholders.
The company has a strong customer brand with good brand recall.
Innovation and technology drive the company. Hence its products are personalized, intuitive, user-friendly and highly engaging.
challenges
– Intense competition in the fintech industry may adversely affect MobiKwik’s customer base, operations and the financial position of the company.
– If MobiKwik fails to attract, engage and retain its users and merchants, its operations may be negatively affected.
– The company deals with highly confidential user data. A security breach or attack on the platform could damage their reputation, brand name and hence its operations.
– MobiKwik’s credit assessment and risk management systems may not effectively identify risks in BNPL credit, which could lead to default payments by users.
The company has incurred losses in the last three financial years (2019-2021). There is a considerable risk that if it cannot maintain or maintain its level of growth it may not make profits in the near future.
– If the company does not keep up with technological changes, it may become obsolete.
financial snapshot
MobiKwik’s revenue growth over the past three years has been quite volatile.
The company’s revenue declined 18.3% year-on-year (YoY) in FY21, while it grew more than 100% YoY in FY20.
However, there has been a steady increase in the number of registered users. The company has seen a growth of 22.2% in registered users in the year 2021. The number of registered users increased by 29.3% in 2020.
The company’s expenses have also been volatile. Overall spending grew by 50% in FY20 while it fell 11% in 2021.
Overall, the company has incurred losses in the last three financial years. Its net loss margin has also been over 20%.
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Is the IPO Frenzy a Bubble?
In the State of Indian Economy report, the Reserve Bank of India (RBI) said that 2021 could be the year of IPO for India.
And it sure seems like it.
So far, India has seen around 45 IPOs, and 20 more IPOs are expected to hit the market in 2021.
These IPOs have increased 660 billion by October 2021. This number is expected to reach 1 ton by the end of the year.
So is the IPO market just a bubble?
Loss-making companies are in a race to get listed in the market with expensive valuations. Investors are equally excited to participate in this IPO frenzy.
One of the main reasons why investors are rushing to participate in the IPO market is to get hold of tech companies in India. With the rapidly evolving technology, investors believe that these firms could be the next big tech giants in India.
But how these loss-making companies will grow in future, only time can tell.
if you Taking part in this IPO frenzy Or considering this, make sure you understand what you’re getting into.
Take a look at the company’s financials and understand the business before making the leap.
Happy investment!
This article is syndicated from Equitymaster.com
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