MobiKwik Versus Paytm: Valuation Comparison Between The Fintech Rivals
One MobiKwik Systems Ltd. made a remarkable debut on the stock exchanges on Wednesday with nearly a 90% premium over the IPO price, which itself was subscribed 119.38 times.
The company is now the only other listed entity in the pure-play fintech space besides Paytm parent One 97 Communications Ltd.
A look at current valuations of MobiKwik and Paytm shows the former looking like a better proposition for investors. However, the Vijay Shekhar Sharma-led fintech major is way ahead in terms of revenue and market share.
Valuation Check
The price-to-sales ratio is a key valuation metric that compares the total value investors are paying for each rupee of a company's sales or revenues. It is calculated by dividing the company's market capitalisation or share price by its sales or revenue per share over a specified period, typically 12 months.
Gurugram-based MobiKwik's IPO market cap was around Rs 2,200 crore, translating into a price-to-sales ratio of 2.5 times in fiscal 2024. At Wednesday's closing, the current market cap of Rs 4,120 crore pulls up the key metric to 4.7 times.
On the other hand, Paytm currently trades at a price-to-sales ratio of 6.4 times.
Going by this metric, MobiKwik appears cheaper than Paytm.
To be sure, Paytm raked in a revenue of Rs 9,978 crore in the previous financial year. Its smaller rival had an income of Rs 875 crore.
Market Share
Paytm had 9-10 crore monthly active users in fiscal 2024, nearly six times that of MobiKwik's 1.6 crore.
Gross merchandise value—that measures the total value of goods sold on a platform over a specific period of time—of Paytm is Rs 18.3 lakh crore compared to Rs 4.7 lakh crore of its smaller rival.
Paytm's merchant base of four crore is 11 times that of MobiKwik.
A major headwind for MobiKwik is that its registered users have grown at just 12% on a compounded annual basis since fiscal 2022. Whereas new registered users have degrown at 15% CAGR since that year. Customer acquisition cost has nearly doubled.
This poses a competitive challenge for the Bipin Preet Singh-led company, which wants MobiKwik to get a 10% market share in the entire UPI ecosystem.
Deven Choksey, managing director of DRChoksey Investment Managers, told NDTV Profit that revenue margins for pure-play fintech companies that do not have other avenues of income can create hurdles for future expansion and sustainability of business.
"Fintech platforms, unless connected with an e-commerce platform, are not going to create sustainable growth for business. Paytm did it but could not sustain it," he said, adding that larger rival Jio has managed to do that with offerings from Reliance Retail.
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