Data from the BSE as of the end of the day shows that retail investors bid for 134 times the shares on offer, non-institutional investors 108 times and institutional investors 119.5 times.
Against 11.8 million shares allocated for the public by the fintech company, 1.4 billion bids were received on the BSE.
The massive appetite for the shares of Mobikwik, which does not feature among the leaders in the digital payment ecosystem, is worth noting. So, what might have worked in its favour? ET explains.
Attractive pricing
At a price band of Rs 265 to Rs 279, the shares have been very attractively priced. A trader who is very active in the unlisted equities space pointed out that Mobikwik shares were trading at around Rs 825 at the end of September. So, many investors are hoping to cash in on a potential listing pop.
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Another fintech founder who operates in the digital payment space said: “The stock has been very sweetly priced. The valuation sought has been at a massive discount and typically companies with a market capitalisation of around Rs 2,000 crore see this kind of interest.”In its third attempt to go public, Mobikwik has not only reduced the size of the IPO but also took a massive haircut on its valuation. In 2021, Mobikwik was valued at $921 million in the private markets and now it is seeking a valuation of around $250 million. These seem to have worked well for the Peak XV Partners-backed company.
Comparison with Paytm
There is bound to be a comparison between Mobikwik and Paytm, given both started their journeys from the digital payments and mobile wallet ecosystem.
Mobikwik, with its focus on financial services, is clearly charting out a path like Paytm. From mobile wallets to Unified Payments Interface (UPI) to consumer credit and merchant payments, that is the trajectory which Paytm travelled. While at a much larger scale, investors might be hoping that Mobikwik can repeat the Paytm experience.
For context: The Paytm stock closed at Rs 984.2 on the BSE on Friday. The company’s market capitalisation stands at Rs 62,731 crore.
Business challenges
While the company might have structured the IPO and timed the listing well, its business outlook continues to face many headwinds which will be its next big challenge.
Credit business: The company focuses on buy-now-pay-later (BNPL) through Mobikwik Zip and unsecured consumer loans through Zip EMI, a sector which is under severe regulatory scrutiny. It also relies on banks and non-banking finance companies (NBFCs) to underwrite these loans. The traditional financial institutions are slowing down on most of their partnerships, so the future growth of this business will be scrutinised.
For context: Both Paytm and PB Fintech-owned Paisabazaar, similar players in this space, have publicly reported the slowdown in their credit books attributing it to their partners going conservative.
P2P slowdown: Peer-to-peer (P2) lending, a sector where Mobikwik had built a decent business, had been almost brought to a standstill by the Reserve Bank of India (RBI) earlier this year. Mobikwik Xtra, which used to be powered by Lendbox, an NBFC-P2P, received major flak on social media earlier this year for not being able to release the promised investments of customers on time.
Payments: In the core payments business, Mobikwik faces its own challenges. It is a marginal player in UPI, with a transaction share of 1%. The mobile wallet business overall has slowed down with consumers choosing UPI Lite over mobile top-ups. Its merchant payment business, Zaakpay, had to reapply for the payment aggregator licence and currently has an in-principle approval from the central bank to operate this business.
One Mobikwik Systems, the corporate entity of this business, is set to hit the stock exchanges on December 18 and after a good book-building process, will be looking for a strong listing performance.
