Launched with tremendous response, know subscription details and investment strategy

The IPO of fintech firm MobiKwik is getting an excellent response from investors. The initial public offering (IPO) of the company opened on Wednesday, December 11, 2024 and will be available for subscription till Friday, December 13, 2024. MobiKwik aims to raise ₹572 crore through this IPO. Due to tremendous subscription on the very first day, there has been a sharp jump in Gray Market Premium (GMP).

Received huge amount from anchor investors before IPO

Even before the launch of the IPO, MobiKwik has raised ₹257 crore from anchor investors. These investors include:

• White Oak Capital
• 360 One Asset Management
• Axis Mutual Fund
• SBI Mutual Fund

Great start: Demand for IPO increased

The IPO was fully subscribed within minutes of opening. Within just 2 hours, it received more than 2.5 times subscription. Along with this, an increase was also recorded in Gray Market Premium (GMP). By 11 am on December 11, MobiKwik’s GMP reached ₹136, representing a premium of 48%.

Price Band and IPO Structure

• Price Range:
  The per share price for MobiKwik IPO has been set between ₹265-279.
• IPO Structure:
  This IPO is a completely fresh issue, it does not include Offer for Sale (OFS).
• Use of funds:
  The funds raised will be used for the company’s expansion, growth, and research and development (R&D).

Is it right to invest in MobiKwik IPO?

expert opinion

1. KR Choksi Research:
   • Rating: “Subscribe”
   • Analysis: MobiKwik has focused on high-margin financial services and is growing by leveraging its payments user base. However, MobiKwik’s services still lag behind rivals like PhonePe, Paytm and PayPal. But with Zipp and Zipp EMI the company has created a unique identity.
2. Anand Rathi:
   • Rating: “Subscribe for a long time”
   • Analysis: The company plans to launch additional services such as investments and insurance. This is expected to increase MobiKwik’s revenue and profits in the future. However, current valuations are high, so it is advisable to focus on long-term investments.
3. AUM Capital:
   • Rating: “Subscribe for a long time”
   • Analysis: MobiKwik’s revenue growth and strong market position make it an attractive investment opportunity. There is strong potential for growth in the fintech sector due to the increasing use of digital payments in India.

IPO valuation

• Post-Issue Price-to-Sales Multiple:
  This is approximately 2.5 times, which is considered reasonable compared to other fintech companies.
• Market-Cap-to-Sales Ratio:
  The ratio is 2.43 times the estimated revenue for FY 2024, which is less than the industry average ratio of 4 times.

Features and challenges of MobiKwik

Features:

1. Focus on Financial Services:
   MobiKwik has strengthened its position in high margin financial services.
2. New Products:
   Services like Zipp and Zipp EMI are attracting customers.
3. Expansion Plan:
   The company is preparing to expand into new areas and add new services.

Challenges:

1. Competition:
   MobiKwik is facing tough competition from big companies like PhonePe, Paytm and PayPal.
2. Profitability issue:
   The company incurred a loss in the June quarter of FY24 due to pre-funding costs.