MobiKwik ₹572 Crore IPO Live: Should You Subscribe? - Everything You Need To Know
India's leading fintech platform, MobiKwik, has launched its ₹572 crore IPO today, December 11, 2024. The IPO comprises a fresh issue of shares with no Offer for Sale (OFS) component, signaling the company's focus on growth and expansion.
The IPO price band is set at ₹265 to ₹279 per equity share. Ahead of the IPO, MobiKwik raised ₹257 crore from anchor investors, including White Oak Capital, Axis MF, and SBI MF. The subscription window closes on December 13, 2024, with the proceeds earmarked for research and development, business growth, and expansion plans.
Why Should You Consider Subscribing to MobiKwik IPO?
Analysts across brokerage firms have issued a 'Subscribe' rating for the MobiKwik IPO, citing its strategic shift towards higher-margin financial services and long-term growth potential.
Key Strengths of MobiKwik IPO:
- Financial Services Expansion: MobiKwik has successfully transitioned from being just a payment platform to offering high-margin financial services like ZIP and ZIP EMI, creating a niche market.
- Growth in Digital Fintech Adoption: India's booming fintech industry provides a favorable environment for companies like MobiKwik to thrive.
- Reasonable Valuation: The IPO’s market-cap-to-sales ratio of 2.43x for FY24 revenue is lower than the industry average of 4x, making it a compelling investment opportunity.
KRChoksey Research noted that MobiKwik is leveraging its payment user base to expand its financial offerings, such as investments and insurance, which could significantly boost revenues.
MobiKwik IPO Valuation and Financial Overview
Price-to-Sales Ratio and Revenue Growth
At a price-to-sales ratio of 2.5x post-issue, MobiKwik's valuation appears reasonable compared to its peers, according to KRChoksey Research. The company’s growth strategy includes diversifying into new financial products and expanding its market reach, which is expected to enhance future profitability.
Anchor Investments
The pre-IPO anchor investment of ₹257 crore from reputed firms like SBI Mutual Fund and White Oak Capital underlines strong institutional interest in the company.
Losses in Recent Quarters
Despite its growth, MobiKwik reported losses in Q1 FY24, attributed to pre-funding cost adjustments. However, analysts believe this is a temporary setback and expect the company’s new initiatives to drive long-term profitability.
Analyst Recommendations on MobiKwik IPO
KRChoksey Research:
"Subscribe" to the IPO, emphasizing MobiKwik's unique position in high-margin financial services and its strategic focus on growth.
Anand Rathi:
Advises a 'Subscribe for Long-Term' strategy, highlighting the company's plans to add services like investments and insurance.
AUM Capital:
Recommends subscribing for a long-term perspective, citing MobiKwik’s robust market positioning and significant revenue growth potential in the growing fintech sector.
Risks to Consider Before Investing in MobiKwik IPO
While the IPO presents significant growth opportunities, there are certain risks to be aware of:
- Competition: MobiKwik trails industry giants like PhonePe, Paytm, and PayPal in user base and service diversification.
- Losses in Recent Quarters: Pre-funding cost adjustments have impacted short-term profitability.
- Execution Risks: The success of new initiatives, such as investments and insurance, depends on execution and user adoption.
What Sets MobiKwik Apart in the Fintech Space?
Launched in 2009, MobiKwik has grown into one of India’s prominent fintech companies with a focus on financial inclusion. Its flagship products, ZIP and ZIP EMI, cater to users seeking hassle-free credit options.
In addition to payments, the company is expanding into investments, insurance, and other financial services to establish itself as a one-stop digital platform for financial needs.
Should You Invest in MobiKwik IPO?
The MobiKwik IPO offers a unique opportunity for long-term investors, given its focus on high-margin financial services and reasonable valuation. While competition and recent losses pose challenges, the company’s strategic initiatives and favorable industry trends make it a promising investment.
With its subscription window open until December 13, 2024, this ₹572 crore IPO provides a chance to invest in India’s rapidly growing fintech sector.
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