One Mobikwik Can Rally 74%, Says Dolat Capital, Revises Rating To 'Buy' On Sharp Correction After Q3 Results

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Dolat Capital Report

One Mobikwik Systems Ltd. reported revenue decline of 7.3% QoQ (our estimate:+20%), due to steeper than expected rampdown in buy-now-pay-later disbursals. Financial services revenue declined 29% QoQ, but Payment services grew 4.7% QoQ. Operating profit margin loss was at 19% (estimate loss: 2.1%), due weak top-line perf.

The company continues to guide robust growth in Payments (added 5 million Users/110,000 Merchants) supported by Pocket UPI and Rupay Credit cards. Financial Services biz. pain seems to have bottomed out, with near term growth to be led by ZIP EMI products (DLG backed) and monetization of its new financial products (Wealth AUA up 11% QoQ).

Noting the impact of Financial services biz., we expect PAT loss to widen in FY25E (Rs 1 billion now versus Rs 180 million previous), and lower FY26E/FY27E earnings by 4.1%/5.4%.

We believe the opportunity for growth on payments rail and financial product distribution would accelerate as IPO proceeds get deployed on growth strategy. Given sharp correction, we revise our rating to ‘Buy’ with target price of Rs 700 which implies two times enterprise value/sales or EV/Ebitda of ~65 times.

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