The company proposes to utilise the net proceeds for funding growth in the financial and payment services business and Investment in data, ML, AI, product and technology
The initial public offering (IPO) of Mobikwik Systems opened on 11 December in an attempt to raise over Rs 500 crore from the public market.
The Rs 572 crore IPO consisted exclusively of a fresh issue component with the price band fixed at Rs 265 to 279 per equity share.
The issue opened on 11 December is scheduled to close on 13 December followed by allotment on 16 December. Subsequently, the IPO will be listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on 18 December.
Dam Capital Advisors and SBI Capital Markets are the book running lead managers, while Link Intime India is the registrar to the offer.
Brokerage Note
“At the upper price band of Rs 279, Mobikwik is available at market cap per sales of 2.5 times (on FY24 financials), which appears to be reasonably priced. We assign a ‘Subscribe’ rating for the issue on a long-term basis, considering its strong brand recall, diversified offerings, rapid scaling, consistent innovation, customer stickiness and promising industry outlook,” stated Geojit Financial Services.
IPO Objectives
The company proposed to utilise the net proceeds of Rs 573 crore for funding growth in the financial services business, payment services business and Investment in data, ML, AI, product and technology.
The proceeds will also be allocated towards capital expenditure for the payment devices business and general corporate purposes.
Additionally, the firm will also get benefits on listing in the public market which will enhance the brand’s visibility and provide liquidity to the shareholders.
Firm’s Financials
Regarding financial performance, for the last three fiscal years, Mobikwik Systems reported a total income of Rs 543.22 crore with net loss of Rs 128.16 crore in FY22.
The revenue increased to Rs 561.12 crore and loss decreased to Rs 83.81 crore in FY23, while in FY 23 the company registered a total income of Rs 890.32 crore with a net profit of Rs 14.08 crore.
Notably, in Q1 of FY25, ending June 2024, the company recorded a loss of Rs 6.62 crore on a total income of Rs 345.83 crore.
The management attributed the Q1 loss to interest provisioning and other expenses incurred due to pre-funding operations in accordance with accounting standards.
