Founded in 2008, by Bipin Preet Singh, MobiKwik (One MobiKwik Systems Ltd.) is a financial technology company offering a wide range of services to its users. MobiKwik Wallet allows users to load money into a mobile wallet assisting them in making payments with just a single click. MobiKwik has emerged as one of the largest mobile wallets fintech in India. MobiKwik is also the leading provider of Buy Now Pay Later (BNPL) services in the country. MobiKwik aims at addressing the unmet credit needs of the fast-growing digitally paying users by combining the benefits of BNPL with the convenience of mobile payments. MobiKwik is expected to come with an IPO of the issue size of Rs. 1,900 crores with the objective to finance its growth in the future. Other details of the IPO are not finalized to date. If you are confused about whether to apply for this IPO or not, this article may guide you to a sound decision.
MobiKwik's business operations consist mainly of consumer payments, BNPL, and payment gateways. Mobikwik is a Financial Technology (Fintech) company as it seeks to improve and automate the delivery and the use of various financial services. At present, the Fintech market in India is valued at $31 billion, which is expected to grow to $84 billion by the year 2025. This indicates growth at a CAGR of 22%. Along with this, the transaction value of Indian Fintech is expected to grow from $66 billion in 2019 to $138 billion by the year 2023 at a CAGR of 20%. The rapid growth in the Fintech sector of the Indian economy promises growth opportunities for all the players of this segment. The mobile payments market of India is expected to grow at a CAGR of 35% as it is projected to reach a valuation of $1,384 billion by 2027 from the present valuation of $125.6 billion. The Indian digital payment transaction value is estimated to grow at a CAGR of 20.20% in the coming years. The BNPL adoption in India is also expected to grow over the next 5-7 years at a CAGR of 28.90% as the BNPL gross merchandise value in India is estimated to reach $37,440.2 million by 2028 from $3,336.3 million in 2020. Though the Fintech sector in India is heavily crowded with players like Paytm, PhonePe, etc. the fast pace of the industry’s growth offers huge opportunities for MobiKwik to prosper and compete in the future.
MobiKwik was founded in 2008 as a mobile wallet company to let users pay their bills through their mobile with a single click. In the past few years, MobiKwik has expanded its operations to include services such as E-commerce shopping, food delivery, pharmacies, BNPL, large retail chains, etc. MobiKwik has a strong user base of over 101 million registered users and more than 3 million E-commerce and physical retail partners. According to a report by the National Payments Corporation of India, MobiKwik enjoys a 26% market share in the IMPS transfer market of India with more than 6.7 lakh transactions during May 2019. MobiKwik introduced its own payment gateway Zaakpay in 2012. MobiKwik also launched MobiKwik Zip, its flagship BNPL product in May 2019. More than 22.25 million users have been pre-approved for MobiKwik Zip by March 2021. Based on the mobile wallet Gross Merchandise Value (GMV) and the BNPL GMV, MobiKwik is among the largest fintech players in India as of FY-2021.
Investors must also have a look at the financials of MobiKwik before taking a call to whether to invest in it or not.
- Revenue Growth: The revenue of MobiKwik has been continuously increasing over the years except for the last year due to the negative effects of the Covid-19. The total revenue of the company fell from Rs. 370 crores in 2020 to Rs. 302 crores in 2021. This fall in the revenue is only of a temporary nature and an improvement in the revenue of the company is expected as the economic condition gets better.
- Net Profit Growth: With the fall in the revenue of the company, the net profit also fell around 10% to (Rs. 111 crores) in the FY-2021. Owing to the huge growth opportunity in the sector and as the company is continuously working on its plans, the net profit is expected to improve in the future.
- Cash Flow from Operations: Again, the cash flow from operations shows a decrease in the FY-2021 as during the lockdowns, the transactions were minimal, which adversely impacted the receivables of the company and the financial expenses rose during this period. As of FY-2021, MobiKwik had a negative cash flow of (Rs. 35 crores) as compared to (Rs. 18 crores) in FY-2020.
- Asset Growth: MobiKwik is working on making its technology base stronger. MobiKwik also led multiple funding rounds to utilize the funds to increase their asset base. Thus, the asset base of the company increased 25.21% over the year. As of FY-2021, MobiKwik had an asset base of Rs. 423 crores as compared to Rs. 338 crores in FY-2020.
|Revenue||Rs. 160 crores||Rs. 370 crores||Rs. 302 crores|
|Net Profit||(Rs. 148 crores)||(Rs. 100 crores)||(Rs. 111 crores)|
|Cashflow from Operations||(Rs. 138 crores)||(Rs. 18 crores)||(Rs. 35 crores)|
|Total Assets||Rs. 335 crores||Rs. 338 crores||Rs. 423 crores|
Competitive Strengths of MobiKwik
- Strong Synergy Effect: MobiKwik’s ecosystem effectively connects the end-users, retail merchants, lending institutions, and other partners. The strong synergy across all the business networks of the company benefits all the parties.
- Huge User Base: MobiKwik has a huge customer base with a very low Customer Acquisition Cost (CAC).
- Brand Name: MobiKwik enjoys strong consumer brand recognition across the country. The brand name of MobiKwik is gaining huge popularity in India.
- High-Tech Technology: MobiKwik possesses sound and high-tech technology and follows a product-first approach to the business. MobiKwik is also an innovation-driven company, always looking for new ideas and products to serve its customer base.
- Huge Asset Investment: MobiKwik is investing tremendously in its assets in order to increase its business base. The asset base of the company grew at 25.20% on a year-on-year basis as of FY-2021.
Points of Weakness of MobiKwik
- History of Losses: MobiKwik has been suffering from losses for the past 4 years. It had also failed to generate positive cash flows in the past years. It seriously needs to work on its expense management and revenue generation to improve its performance in the future.
- Inability to Attract Merchants: The business of MobiKwik depends heavily on merchants, but the company has failed to attract new merchants. It also failed to retain and grow its relationship with its existing merchants.
- Security Issues: MobiKwik in the past had problems in effectively dealing with fraudulent transactions, illegal activities, and negative user experiences. It also suffers from the risk of protecting its intellectual property rights from being infringed by others.
- Strong Competition: MobiKwik competes for their business with some of the strongest peers in the industry like Paytm and Phonepe. Along with these companies, MobiKwik also faces intense competition from upcoming fintech startups.
MobiKwik prospects look strong with respect to the growth in the industry and the company overview. But the real problem lies in the financials of the company. The company is suffering from continuous losses, has negative growth in revenues, and is cash negative. Although the future looks promising for the company, the investors need to be very careful before putting their money in it.