MobiKwik\'s Financial Frontier: A Comprehensive IPO Preview

Summary

The article focuses on MobiKwik's success in the digital payments industry, emphasising its early acceptance and flexibility to shifting online payment patterns. It implies that MobiKwik's proactive expansion and the expected rise in virtual platforms make investment in its IPO possibly profitable in the long term. The summary recommends careful study and research prior to making financial decisions.

Overview

The financial technology market in India has been booming since demonetization. People have increasingly started making payments using their phones and digital wallets. Paytm, owned by One97 Communications, already had its IPO in the market, and now, MobiKwik is gearing up for its upcoming IPO. However, before delving into these IPOs, it is essential to understand what exactly fintech is. Fintech refers to computer programs or technologies that make financial and banking processes more efficient. In today's booming fintech startup landscape in India, companies like PhonePe, Paytm, Slice, and Navi-Loans, among many others, have brought about revolutionary changes through product development and product strategy. While most of the new fintech startups in India are currently operating at a loss, it is justifiable because achieving profitability in the tech space and technology business takes time.

Now let's talk about MobiKwik. MobiKwik operates like PhonePe and Paytm. It offers the same products and services as these platforms.

MobiKwik, a unicorn in terms of valuation that was founded by Bipin Preet Singh and Upasana Taku, a husband and wife combination, is about to go public. This article explores the amazing development and functioning of the successful Indian firm, MobiKwik. Explore MobiKwik's current news, founders and team, startup narrative, business and revenue model, fundraising and investors, partnerships, growth and revenue, awards, competition, and beyond. The company was founded to make payments easier and more enjoyable for every Indian.

The business model of MobiKwik

MobiKwik, positioned as one of the biggest mobile wallets in India, aims to replace personal wallets with a virtual wallet that allows users to keep money. Then, this fund may be easily used to make purchases and pay utility bills via a variety of channels, including SMS, IVR, desktop, tablet, and mobile.

For example, customers may use the iOS/Windows/Playstore App to recharge their phones or use it to buy bus tickets on well-known booking websites. It also makes ordering and paying for a variety of services—like pizza delivery—easy. The Reserve Bank of India has acknowledged MobiKwik as a prepaid financial tool that guarantees the security of every cent that is kept.

MobiKwik is a digital payment company that operates similarly to other firms that rely on mobile wallets. Its business model revolves around peer-to-peer (P2P) transactions that are made possible by its application.

MobiKwik's main income stream is commissions on every transaction made through its affiliated businesses. In addition, the app's carefully positioned adverts provide revenue for the platform. By cross-selling insurance and mutual fund products, MobiKwik adds a fee-based component to its revenues and diversifies its sources of income.

Distributing digital credit products now accounts for half of MobiKwik's revenue; the other half comes from its payment services. This well-rounded strategy highlights the platform's adaptability in terms of financial services and transaction support.

MobiKwik effectively entered the offline market by enabling mobile payments for physical businesses, including well-known chains like Domino's Pizza and Big Bazaar, extending its reach beyond the internet sphere. On July 18, 2013, the platform received the prestigious Prepaid Payment Instrument license from the Reserve Bank of India. Furthermore, MobiKwik received RBI clearance in principle to launch the Bharat Bill Payments Operating Unit (BBPOU). This calculated action enables consumers in all of India's regions—rural or urban—to easily pay their utilities and other bills using the MobiKwik wallet.

The Indian financial startup MobiKwik uses a digital wallet as its business strategy. The business offers a platform that lets customers use their cell phones to hold money, make payments, and carry out other financial operations. Transaction fees, merchant commissions, interest on the float—the money kept in the wallets—and providing financial services like loans and insurance are just a few of the ways that MobiKwik makes money. In addition, collaborations and advertising might bring in money for the business. The foundation of MobiKwik's business strategy is offering its consumers safe and easy access to digital financial services while generating a variety of income sources to support the company's expansion.

Segments of Mobikwik

MobiKwik's fintech section provides a variety of financial services, including

• Payment Services

• Digital credit.

• Investment possibilities.

• Wealth Management

• Credit Services

• Mutual funds

• Digital gold loans

• Money transfers

• Buy Now, Pay Later (BNPL) services.

These services appeal to both customers and merchants, and MobiKwik has expanded its offerings to include other financial products like credit, insurance, and mutual funds, in addition to its existing services like bill payments, payment gateway services, and digital payment solutions.

How does Mobikwik earn money? 

MobiKwik's revenue comes from a variety of sources, including transaction fees, commissions, and loan interest. The organisation offers a variety of financial services, including payment solutions, digital credit, investment options, and purchase now pay later services. MobiKwik has also announced an initial public offering (IPO) to obtain funding for future development. Consumer payments, payment gateway services, and buy now pay later (BNPL) financial products all contribute to the company's income. MobiKwik's revenue also includes interest on non-current assets and other sources. The firm intends to broaden its business and improve contact with consumers and merchants by offering varied financial products like credit, insurance, and mutual funds, in addition to its present services like bill payments, payment gateway services, and digital payment solutions.

Industry research

The fintech market in India is expanding quickly. Every month, another fintech innovation emerges in the market. However, it is also true that this industry is incredibly complicated, and starting a firm in it is extremely tough due to the high expenses and the difficulty of extracting profit from income. At the same time, the company's board of directors must book a return, which will be recorded only if the firm has achieved a profit. According to a NASSCOM assessment, fintech is one of the most promising areas in India's ecosystem.

According to the Nasscom (NASSCOM)-KPMG (KPMG) research, India's overall Fintech software and services industry was around $8 billion in 2016 and is expected to expand 1.7 times by 2020. According to the research, the transaction value for the Indian Fintech sector was over $33 billion in 2016 and is expected to reach $73 billion by 2020, rising at a five-year compound annual growth rate (CAGR) of 22%. (Feb 11, 2.) According to Accenture (Mandavia, M, 2020), fintech investments in India quadrupled to $3.7 billion in 2019, up from $1.9 billion the previous year, becoming the country the world's third largest Fintech centre, trailing only the United States and the United Kingdom.

Yearly Growth Rate of Fintech in India

Advanced technology, massive data, and complicated AI/ML algorithms have benefitted both customers and lenders. Fintech can disrupt and introduce new sorts of risk. Regulators throughout the world are working tirelessly and deliberately to ensure consumer protection and maintain financial stability while also creating an environment for safe Fintech developments. The future of FinTech is founded on purposeful coordinated measures to enhance framework circumstances linked to customer trust, regulation, and scalability.  Fintech is vital for the future of the financial industry since inclusive finance contributes significantly to national economic growth. Fintech is transforming the financial industry.

The Indian Fintech industry's Total Addressable Market is anticipated to reach $1.3 trillion by 2025, while Assets Under Management and Revenue are expected to be $1 trillion and $200 billion, respectively, by 2030.

Fintech's major areas include payments, digital lending, insurtech, and wealthtech.

The payments environment in India is estimated to exceed $100 trillion in transaction volume and $50 billion in income by 2030.

India's digital lending market was valued at $270 billion in 2022 and is projected to reach $350 billion by 2023.

India is the second biggest Insurtech market in Asia-Pacific and is predicted to expand by ~15X to reach $88.4 billion by 2030, making it one of the fastest-growing insurance markets in the world.

Shareholdings of MobiKwik

The firm completed 22 fundraising rounds, including 1 seed, 4 early-stage, 13 late-stage, and 4 debt rounds, for a total funding of $269 million. The highest single investment round was $50 million, with participation from 123 investors, including 49 institutional and 74 angel investors.

Peer comparison

Financials of MobiKwik

Special purpose interim consolidated balance sheet as of 30 September 2023

Special purpose interim consolidated statement of profit and loss for the six months ended 30 September 2023

Valuation & IPO

MobiKwik's worth in October 2021 was $1,000 million. According to the DRHP filed with SEBI, the MobiKwik IPO would raise Rs. 1900 crore through a new share offering of up to Rs. 1500 crore. Furthermore, the founders and some shareholders will make a Rs. 400 crore offer for sale in the first public offering. This impending IPO is expected to have a valuation of around $1 billion. Qualified institutional buyers will be allocated 75% of the IPO shares, while non-institutional and retail investors will receive 15% and 10%, respectively.

Conclusion

MobiKwik is a pioneer in the digital payments and mobile wallet market, having successfully negotiated the changing terrain of online transactions well ahead of competitors. The company's in-depth grasp of virtual platforms, as well as its capacity to react to ever-changing online payment trends, have helped shape its successful business strategy. Furthermore, MobiKwik's proactive approach to increasing its service offerings demonstrates a dedication to growing its client base and keeping up with evolving market trends. As the development trajectory of virtual platforms, particularly mobile wallets, is expected to accelerate in the next years, investing in the MobiKwik IPO might provide long-term advantages. However, like with any investment, potential investors must undertake extensive research and consider risk considerations before making educated judgements in this volatile market.