One Mobikwik Systems IPO - Issue Details, Financials, Strengths, Risks, Peer Comparison And More: DRChoksey

Deven Choksey Research Report

One MobiKwik Systems Ltd.'s will launch its initial public offering on December 11 and the offer closes for subscription on Dec. 13. A platform business with a two-sided payments network, including consumers and merchants has fixed the price band in the range of Rs 265-279 per share.

The Rs 572 crore IPO is entirely of a fresh issue with no offer for sale component.

The shares will be listed on the exchanges on Dec. 18.

Objects of the offer

• Funding organic growth in financial services business.

• Funding organic growth in payment services business.

• Research and development in data, ML and AI and product and technology.

• Capital expenditure for our payment devices business.

• General Corporate.

Outlook and Valuation:

MobiKwik operates in India's fast-growing digital payments and financial services market, which offers significant long-term growth opportunities. The company has strategically shifted towards higher-margin financial services, capitalizing on its established payment user base to drive this transition.

Its focus on promoting financial inclusion, particularly among the creditunderserved population, further strengthens its growth prospects. MobiKwik has reported a 29% revenue CAGR from FY22 to FY24 and reached Ebitda-level profitability in the current fiscal year.

In comparison to its peers like PhonePe, Paytm, and PayPal, MobiKwik significantly lags in registered user base and diversified service offerings.

While the company has carved out a niche in ZIP and ZIP EMI offerings, with a growing Financial Services vertical and a low CAC/user, the company is poised to build and attract a bigger pie.

The post issue price to sales of 2.5x seems reasonable compared to it’s peers. Considering these factors, we assign a “Subscribe” rating to MobiKwik IPO.

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