One MobiKwik Systems IPO Day 1: Fully Subscribed Within 1 Hour, GMP Hints Strong Listing, Key Dates

The initial public offering (IPO) of One MobiKwik Systems Limited has hit the primary market, opening today, December 11, 2024, and running through December 13, 2024. The fintech company, known for its digital payment and financial services platform, aims to raise Rs 572 crore through an entirely fresh issue of shares, with the IPO price band set at Rs 265 to Rs 279 per equity share.

Key Details of MobiKwik IPO
MobiKwik offers its shares in lots of 53, making it accessible to a range of investors. The subscription window will operate from 10:00 am to 5:00 pm daily during the three-day period. The company has roped in Link Intime India Private Limited as its registrar and appointed SBI Capital Markets and DAM Capital Advisors as the lead managers for the issue. Post-allotment, the shares are expected to be listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on December 18, 2024.

As of December 11, the grey market premium (GMP) for MobiKwik shares stands at Rs 136, indicating a potential listing price of Rs 415 per share indicating a 48.75% premium over the upper price band.

Subscription Status
Early indications show a mixed subscription response. By 11:12 am on the opening day, the IPO had been fully subscribed, 1.41 times overall. The retail category outperformed with a subscription rate of 5.95 times. However, Qualified Institutional Buyers (QIBs) recorded no subscriptions, while Non-Institutional Investors (NIIs) achieved a subscription rate of 1.20 times.

Market Potential
MobiKwik operates in a rapidly growing digital payments sector. India's digital transaction value reached $30 trillion in FY24, growing at a compound annual growth rate (CAGR) of 19% between FY21 and FY24. Analysts project this figure to expand further, with a CAGR of 22% expected between FY24 and FY28, potentially reaching $60-70 trillion. Similarly, the mobile wallet payments segment, where MobiKwik plays a significant role, is forecasted to grow from $29 billion in FY24 to $65-75 billion by FY28, at a CAGR of 20-25%.

Financial Performance & Valuation
MobiKwik's total income grew at a CAGR of 28% from FY22 to FY24, reaching Rs 345.82 crore. It reported a Profit After Tax (PAT) of Rs 14 crore in FY24, with its EBITDA margin improving from a negative 21.24% in FY22 to a positive 4.18% in FY24. The Payment GMV grew at an annual rate of 45.9%, while its ZIP GMV (disbursements) skyrocketed by 112.2% between FY22 and FY24.

Despite the strong financial performance, the IPO's valuation has raised eyebrows. At the upper price band, the issue is valued at a price-to-earnings (P/E) ratio of 113x based on FY24 earnings. Brokerage firms like BP Equities and Anand Rathi Research have noted that while the valuation is steep.

Analyst Recommendations
BP Equities has issued a "Subscribe" rating, citing MobiKwik's offerings, strong market presence, and the growth of the digital payments industry. The brokerage emphasized the company's transformation into a comprehensive financial platform, offering services like money transfers, UPI-based payments, and digital credit.

Anand Rathi Research also highlighted MobiKwik's customer acquisition success, with over 161 million registered users and 4.26 million merchants onboarded as of June 2024. The firm acknowledged the company's efforts to expand its product portfolio into investments and insurance, which could boost future revenues. However, it flagged the rich valuation and recent Q1 FY25 losses as areas of concern, recommending a "Subscribe - Long Term" rating.

While MobiKwik IPO presents a promising opportunity, it is not without risks. Analysts point out that the company's valuation and reliance on growth in digital payments could make it vulnerable to market competition and regulatory changes. Additionally, the subdued response from institutional investors on the opening day signals a cautious approach.