Mobikwik Systems IPO Makes Stellar Debut; Lists With 57% Premium

The initial public offering (IPO) of Mobikwik Systems made a stellar debut on the stock market, listing at Rs 440 per share, a 57.71 per cent gain over its issue price of Rs 279 after garnering a huge response from all the categories. 

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. 

During its subscription phase, Mobikwik IPO garnered a total subscription of 125.69 times, with bids amounting to nearly Rs 40,000 crore. Retail investors showed confidence with subscribing the issue to 141.78 times, while qualified institutions' subscriptions stood at 125.82 times. 

Expert Note
“The issue is valued at a price to earnings (PE) of 113n times on the upper price band based on FY24 earnings, which is expensive. However, given the company’s strong market presence, improved financial performance, and industry tailwinds, we recommend that investors who have been allotted shares consider ‘holding’ their positions from a medium- to long-term perspective, said Abhishek Pandya, Research Analyst, StoxBox.

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 a net loss of Rs 128.16 crore in FY22.

The revenue increased to Rs 561.12 crore and the loss decreased to Rs 83.81 crore in FY23, while in FY23 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 by accounting standards.