The IPO of Mobikwik Systems has garnered significant investor interest, with the offering oversubscribed nearly 120 times. The subscription period, which ran from December 11 to December 13, saw intense demand, highlighting strong investor confidence in the digital payments sector despite challenges faced by the company.
On the third and final day of the IPO, Mobikwik’s issue was subscribed 119.38 times, receiving bids for 1,41,72,86,992 shares against the 1.18 crore shares on offer. This exceptional demand stands in stark contrast to the other two IPOs that closed last week – Vishal Mega Mart, which was subscribed 27.28 times, and Sai Life Sciences, which received 10.27 times subscription.
Mobikwik IPO Grey Market Premium
The grey market premium (GMP) for the Mobikwik IPO is currently ₹166, signaling a potential listing price of ₹445. This represents a 59% premium over the upper price band of ₹279 per share, which indicates strong investor expectations for the stock’s market debut.
What Fueled the Investor Frenzy?
Several factors contributed to the high demand for Mobikwik’s IPO:
- Attractive Pricing: The price band of ₹265 to ₹279 per share for the IPO was considered reasonable. At the upper price band, Mobikwik was priced at a market capitalization-to-sales ratio of 2.5 times based on FY24 financials, which experts deemed as competitive.
- Strong Growth Prospects: Mobikwik is a key player in the fast-growing digital transactions market. According to experts, the digital transactions market, valued at $30 trillion in FY24, is expected to grow at a CAGR of 22% from FY24 to FY28. Mobikwik, which is deeply involved in mobile wallet services and digital lending, is well-positioned to tap into this expanding market, especially given the large underserved population in India.
- Solid Financial Performance: Mobikwik has turned profitable at both the EBITDA and PAT levels in FY24. Over the last two years, its revenue grew at a CAGR of 29%. Additionally, the company demonstrated exceptional growth in GMV (gross merchandise value), with its payment GMV increasing by 46% and MobiKwik ZIP GMV growing at an impressive 112%.
- Brand Strength: Mobikwik enjoys a strong brand presence across India, especially in both large and small cities. Its recognition in the digital payments landscape, along with the popularity of its product Xtra, has fostered strong consumer trust, which experts believe further bolstered investor confidence.
As the IPO concludes, market experts remain optimistic about Mobikwik’s future growth trajectory, with its solid financials and positioning in the rapidly growing digital payments sector.
