Inspired by the IPO of Paytm, another one of India’s payment service providers, One Mobikwik Systems also revealed its plans of coming out with its public issue. The company had even filed a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in that regard in 2021.
However, the company had to temporarily pause its efforts due to an unfavorable investment climate. That said, One Mobikwik Systems may plan to renew its efforts to come out with its public issue in 2023. Here’s what we know so far about it.
Company Overview
Established as recently as 2009, One Mobikwik Systems is a company operating in the fintech space. It owns one of India’s largest mobile wallets - MobiKwik and has also branched out into the Buy Now, Pay Later (BNPL) segment.
The MobiKwik app has more than 101.37 million registered users and partnered with over 3.44 million e-commerce and physical retail billers as of March 31, 2021. The company has three primary business verticals, which are Buy Now, Pay Later (BNPL), Consumer Payments (MobiKwik wallet) and Payment Gateway (Zaakpay).
Under the BNPL business vertical, the company owns and operates two brands - MobiKwik Zip and Zip EMI. Through these brands, the company provides small-ticket credit facilities for its users.
Under the Consumer Payments vertical, the company owns and operates the popular MobiKwik wallet. Using this wallet, users can pay for products, services, and utility bills.
Under the Payment Gateway vertical, the company owns and operates Zaakpay, which is a payment gateway. Zaakpay offers end-to-end payment processing solutions for both big and small businesses.
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Company Financials
Now that you’ve been introduced to the company, let’s find out more about its financial situation. According to the DRHP filed with the SEBI, the key financial metrics are as follows.
(figures are in ₹ million)
| Particulars |
FY21 |
FY20 |
FY19 |
| Equity Share Capital |
10.05 |
10.05 |
10.05 |
| Net Worth |
-200.13 |
-308.52 |
-15.73 |
| Total Borrowings |
605.93 |
764.66 |
864.32 |
| Operating Revenue |
2,885.71 |
3,556.75 |
1,484.75 |
| Restated Profit / (Loss) |
-1,113.00 |
-999.2 |
-1,479.73 |
| Diluted Earnings Per Share (EPS) |
(22.18) |
-20.45 |
-31.01 |
| Net Asset Value (NAV) per equity share |
-3.88 |
-6.24 |
-0.33 |
Note: Except for the Diluted EPS and NAV per equity share, all other figures are expressed in ₹ million.
Key Strengths of the Company
One Mobikwik Systems Limited has a few key strengths that give it an edge over its competitors. Let’s check out a few of them.
- High active user base with low Customer Acquisition Cost (CAC)
- Strong growth in all business verticals
- MobiKwik is a very popular and recognizable brand in the country
- Technology first approach
Key Risks for the Company
In the DRHP, the company has outlined a few risks threatening its business. Here’s an overview of what they are.
- The Indian fintech industry is very competitive and growing fast
- Threats to the security of the platform
- Potential data breaches leaking personal and confidential information
- Inability to attract new customers or merchants to the platform
- Inability to grow the existing relationship with customers and merchants
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Details of the IPO
Now that you’ve gotten a good understanding of the company, let’s proceed to take a look at some of the details of its upcoming IPO. Now, since One Mobikwik Systems hasn’t filed the final Red Herring Prospectus, certain key information regarding the public issue is unavailable. This includes the issue opening and closing dates and the IPO price band. However, we do have access to certain information. Let’s take a closer look at what they are.
The total issue size of One Mobikwik Systems’ IPO is around ₹1,900 crores. Out of this, the fresh issue of equity shares component is likely to rake in around ₹1,500 crores for the company. The remaining ₹400 crores would be from an Offer for Sale (OFS) from the company’s promoters.
Around 75% of the company’s public issue has been reserved exclusively for Qualified Institutional Buyers (QIBs). Among the remaining 25%, around 15% has been reserved for Non-Institutional Investors (NIIs) and 10% for retail investors.
Objects of the Offer
One Mobikwik Systems has also stated its plans for the IPO proceeds in the DRHP filed with the SEBI. Here’s what the company plans to do with the funds raised via its public issue.
- Use it for organic and inorganic growth initiatives
- Use it for general corporate purposes
Conclusion
More information regarding the public issue will come to light once One Mobikwik Systems files the final Red Herring Prospectus. That said, If the Paytm IPO is anything to go by, the company needs to ensure that it sets the right price band for its issue, especially since investors are staying away from over-valued companies.
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