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An emerging player in dynamic fintech landscape...

One Mobikwik Systems Ltd. (Mobikwik), founded in 2008, is a technology-driven company specializing in digital financial services and payments. As of June 2024, it serves over 161mn users and 4.26mn merchants. Mobikwik provides a variety of services, including digital payments, credit, and investment products. By May 2024, it had captured a 23.11% market share in the prepaid payment instruments (PPI) wallet segment by gross transaction value, making it the largest wallet provider in India. The company has a vast reach, covering 99% of India's pin codes.

* MobiKwik’s addressable market in FY23 is approximately USD 5.3 bn (INR 424 bn), projected to grow to ~USD 16-18 bn (INR 1.3-1.4 tn) by FY28, driven by rising internet penetration, higher disposable incomes, increasing digital penetration, and awareness.

* The payment GMV (gross merchandise value) has grown at an annual rate of 45.88% and MobiKwik ZIP GMV (Disbursements) has grown at an annual rate of 112.16% from FY22 to FY24, led by new consumer and merchant additions and higher spends from existing customers.

* The registered users have grown at a CAGR of 12.31%, from 123.56 mn in FY22, to 155.84 mn in FY24, and further reaching 161.03mn user base by June 30, 2024.

* Revenue grew at a CAGR of 29% (over FY22-24) to Rs.875cr and became profitable at both the EBITDA and PAT levels in FY24.

* The operating costs have consistently decreased, especially led by a declining trend in lending related expenses from 7.2% in FY22 to 3.3% in FY24 and 4.04% in Q1FY25.

* Mobikwik enjoys a strong brand presence and recognition in both large and small cities across India. With ~72% of digital loan disbursements in Tier 3+ locations, Mobikwik is bridging the financial gap and empowering underserved regions with modern financial services.

* Mobikwik has experienced strong traction in its wealth vertical, with Assets Under Administration (AUA) rising sharply from Rs.323.68cr as of FY22, to Rs.6,692.85cr by June 30, 2024.

* At the upper price band of Rs.279, Mobikwik is available at Mcap/sales of 2.5x (on FY24 financials), which appears to be reasonably priced. We assign a “Subscribe” rating for the issue on a long-term basis, considering its strong brand recall, diversified offerings, rapid scaling, consistent innovation, customer stickiness and promising industry outlook.

Purpose of IPO

The IPO consists of only fresh issue of Rs.572cr. The proceeds from its fresh issuance will be utilised for (i) Funding organic growth in financial service business- Rs.150cr (ii) Funding organic growth in payment service business - Rs. 135cr (iii) Research & development in data, ML and AI and product and technology- Rs.107cr (iv) Capital expenditure for payment devices business- Rs.70cr and (V) general corporate purposes.

Key Risks

* Any RBI regulations on the fintech industry would impact business operations.

* Intense competition in fintech industry.

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SEBI Registration Number: INH200000345