One MobiKwik IPO: Essential Insights for Investors

Introduction

One of these IPOs that has been generating interest is One MobiKwik Systems Limited, a premier online space that has revolutionised digital financial services in India. This article goes deep into critical learnings for investors exploring MobiKwik's IPO and its possible ramifications.

One MobiKwik IPO Objectives

All the funds raised from the IPO will be reinvested in the company. The net proceeds that MobiKwik intends to use would go towards paying off its debts and financing the organic development of the company. Out of that ₹250 crore will go towards financial services, ₹135 crore for will be given to payment beneficiaries, and investing in data, AI/ML, or product tech. Moreover, ₹70.28 crore will be allocated for investment in capital equipment for payment devices as well as general corporate purposes.

Assessing Key Strengths

• Robust Ecosystem Connectivity: MobiKwik has an open ecosystem that provides a robust connectivity between end-users, merchants, lenders, and other partners. This interdependence is also driven by a mutually attractive network that e benefits of all stakeholders.

• Large and Engaged User Base: One of MobiKwik’s biggest strengths is its ability to attract a huge and active user base. Through low consumer conversion cost. This has helped MobiKwik emerge as a credible and go-to platform for digital transactions.

• Brand Recognition Nationwide: MobiKwik has certainly made an early entry into the e-wallet market, and due its branding efforts, the company and its features haves made a mark across the country. This acceptance makes the company a feasible alternative for digital financial services among consumers.

• Innovation-Driven Approach: MobiKwik’s approach to business is mainly technology- and product-centred. This approach has enabled them to introduce new products such as instant small-ticket loans, EMI payment options, and insurance covers.

• Diversified Product Portfolio: The range of products offered by MobiKwik are beyond the conventional scope of digital payment services. MobiKwik has added BNPL solutions and an adaptable digital wallet, alongside subsidiaries like Zaakpay that allow it to act as a holistic solutions provider for managing various financial requirements.

• Strategic Acquisitions: In 2018, the company made strategic acquisitions such as Clearfunds, an online mutual fund platform., that have consolidated its presence in the market. Partnerships with 36 asset management companies and four insurance companies also have an impact on MobiKwik in terms of market share.

• Strategic Partnerships and Integration: MobiKwik creates has created an online payment gateway system that has adapted to several platforms, including platforms hosted by e-commerce merchants, large-format retail stores, bill payment shops, and peer-to-peer transfers.

• BNPL Market Dominance: MobiKwik Zip is an innovative BNPL product that has enjoyed a remarkable repetitive success rate of 79.1% in FY21, becoming one of the company’s highlights during its operations. This emphasises the company’s unquestionable dominance in the BNPL space, offering convenient and cheap small-ticket credit to countless users.

• Technological Advancements: Big data analytics and deep learning, including machine learning, are part of MobiKwik's arsenal as a tech-focused platform. Their dedication to innovate their platforms continually has enabled the firm to outplay its competitors to a great extent.

• Adaptability to Market Trends: MobiKwik’s proactively leverages market trends which sets the company up to respond swiftly to soaring environmental changes. This flexibility is also a contributor to the introduction of less complex, innovative products that are easy to understand, which has helped the businesses to grow at minimal costs.

• Monetisation Diversification: According to the RedSeer Report, MobiKwik has one of the highest diversifications for monetisation among digital payment platforms. The firm can successfully monetise its payments platform by introducing a cross-sell engine at the early stages of the consumer and business lifecycle.

• Low Customer Acquisition Cost (CAC): Even though the market is competitive, what sets MobiKwik apart from other providers is its success in attracting a significant number of new consumers every year. Its low customer acquisition cost is a reflection of the successful measures applied by the organisation in acquiring and keeping its clients.

• Market Presence and Network: MobiKwik covers up to 3.70 million physical shops along with 0.11 million online vendors in India. The involvement of the company in multiple payment modes, from e-commerce to UPI payments, is indicative of a solid business ecosystem that fuels growth across all three business verticals.

• Innovative Credit Distribution Model: The company has aligned its own flagship product with numerous lending partners, including scheduled banks and non-banking financial companies. Through this cooperation, MobiKwik can provide the ledger customer with credit products effectively.

Recap: Getting Around the MobiKwik IPO Terrain

The company’s IPO purposes, characterised by a uniform reinvestment of funds to clear debts and support organic development, demonstrate a level-headed move. As the fintech industry continues to evolve, MobiKwik's strategic positioning and commitment to technological advancements make it a compelling player. Nevertheless, investors need to be careful of the various challenges, including market volatility, regulatory risks and the company’s ability to manage them. One’s investment decision should be as per the individual’s risk appetite and with due attention paid to the changing environment.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.

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