MOBIKWIK IPO! What should you know before applying?
Sharing my thoughts on the some big upcoming IPOs!
Good Evening People! Hope you are fine and doing well. We have been witnessing some crazy moves in the market with some famous names falling like a sharp knife. Well, I hope you all had your stop losses at the place.
Let’s talk about some IPOs which are lined up. Like -
MOBIKWIK
NYKAA
POLICYBAZAAR
ADANI WILMAR
I’ll be publishing a series of newsletters for the IPOs.
Let’s start with MOBIKWIK in this one.
ONE MOBIKWIK SYSTEMS LIMITED, incorporated in New Delhi. MOBIKWIK is a payment app that over the years users have used to pay their utility bills and other payments. They have a huge merchant network where users can pay via MOBIKWIK WALLET at the POS. Also, they have peer-to-peer payments via UPI. To further improve they introduced Zaakpay which helps websites and mobile apps to collect payment from its users via debit, credit cards, mobile wallets, UPI, and net banking.
In 2019 they launched their BNPL(Buy Now Pay Later) product Mobikwik Zip. As of March 31, 2021, 22.25 million users have been pre-approved for MobiKwik Zip, and in Fiscal 2021, our MobiKwik Zip users repeat rate was 79.19%.
MOBIKWIK is one of the biggest players in BNPL.
Let’s learn some more about Internet penetration and online transactions and payment data as of now in INDIA.
Approximately 68% of India’s population is young and 55% of its population is between 20-59 (working population), which would be key to its economic growth.
India is growing faster than other major economies like the United States and China against a backdrop of a highly productive workforce.
GDP growth in India is also expected to be driven by rising private final consumption expenditure (“PFCE”) in the next five years.
India has reached one of the highest smartphone and internet penetration in the world.
Internet and smartphone penetration has nearly doubled from 2015 to 2020 and continues to grow in India.
Growth of India’s consumer internet market for products and services - to become a US$ 300 billion-plus industry by Fiscal 2026.
Online transactors and shoppers have been both growing in India rapidly and this is driving the consumer internet economy. India’s online transacting users have rapidly grown at a CAGR of approximately 15% from 180 million in Fiscal 2018 to over 250 million in Fiscal 2021.
India ranks as the second-largest mobile payment market in the world in terms of the user base.
Within mobile payments, mobile wallet payments are expected to grow (by value) by three times to reach approximately US$ 60-70 billion by Fiscal 2026.
BNPL OPPORTUNITY IN INDIA. India has low credit card penetration (approximately 3.5% of the Indian population above the age of 15 years) compared to the developed countries; this is an opportunity for BNPL models to grow in India as well. India’s overall retail credit penetration remains significantly lower than its global peers as well.
In the context of a population starved of formal credit, BNPL has emerged as a major disruptor. Both globally as well as in India, BNPL players have made strong inroads in e-commerce, food tech, and other online and offline consumption categories. Consumers adopt them both for convenience (for instance, in case of lower ticket size food delivery purchases) and for affordability (for instance, high ticket size shopping payments via EMI loans to purchase consumer durables) they provide.
India’s BNPL market has rapidly grown to reach US$ 3-3.5 billion in disbursals in Fiscal 2021 and is on track to grow to US$ 45-50 billion by Fiscal 2026 driven by user growth.BNPL in India is expected to grow approximately 15 times in the next five years and become a large share of the consumer internet market. Wallet-based (revolving credit) BNPL model also has significant inherent advantages compared to other BNPL peers and is well placed to capture the large BNPL opportunity.
Wallet-based (revolving credit) BNPL model vs credit cards - more scalable with lower customer acquisition costs and balance sheet risks. BEYOND BNPL- ADDITIONAL CROSS-SELL OPPORTUNITIES IN WEALTH AND INSURANCE FOR MOBILE WALLETS CUSTOMERS
MOBIKWIK’s future growth prospects are to lead in BNPL, Wealthtech, and InsureTech which also makes them a key player in retail BNPL credit.
Let’s talk some numbers -
Parameters FY 21 FY20 (in INR millions)
Income 3022.56 3698.54
EBITDA -1018.14 -846.37
PAT - 1102.63 - 980.50
Company is in NET LOSS from past 3 financial years. Also has debt on the balance sheet and fewer cashflows. Also, the founders of the company just own a 35% stake. There are seller stakeholders in this 1900 crore issue of which 1400 crore is a fresh issue and 400 crores are offer for sale (OFS). Some major investors are looking to sell their stake here like BAJAJ FINANCE, SEQUOIA CAPITAL, CISCO, AMERICAN EXPRESS, etc.
The key takeaway from this DRHP information is BNPL is one of the disrupting features in the credit industry, especially in the retail segment.
Also seeing other Payment players MobiKwik still lacks user reliability according to me. I don’t see them competing with the giants like BAJAJ FINSERV, HDFC BANK, etc although MOBIKWIK is leading in BNPL products but still competing with these giants and other payment companies make it difficult for me to understand their growth. The balance sheet is off as well too much expense from the income.
IPO dates are not yet announced. So do your due diligence before applying for it.
All the data is taken from MOBIKIWK DRHP.
Next up is NYKAA!
See you in the next one!
Adios!