Mobikwik to raise private funding as stock market turns bearish

Fintech start-up turns profitable for the first time in December quarter on massive BNPL uptake

With the stock market turning choppy, fintech start-up Mobikwik, which had filed a DRHP raise around $250 million through an initial public offering, is now looking to raise money from the private market.

“We will raise private money but we are not in dire need. The business was profitable for the first time in the December quarter on a topline of around Rs 150 crore and that will be maintained in the March quarter also. We are generating cash,” said Upasana Taku, co-founder of Mobikwik.

The company said that its revenues grew 86 per cent Y-o-Y for the nine months ending December 2021 to Rs 397 crore – whereas consolidated gross merchandise increased 152 per cent to Rs 25,780 crore.

The growth came on back of a surge in usage of its BNPL (buy now pay later service) as disbursals grew 840 per cent to Rs 1,858 crore during the period. At present, the BNPL segment contributes around 20 per cent to the company’s revenue stream – and the share is expected to rise over the next few quarters.

“MobiKwik’s first mover-advantage, a strong user funnel  of around 25 million pre-approved BNPL users leveraging its consumer payments platform coupled with a 3.5 million strong merchant ecosystem has led to ever increasing user adoption and engagement with monthly spends of  Rs 3,245 and 81 per cent repeat rate,” said the company.

According to Taku, Mobikwik’s unit economics have improved a lot in the past couple of years and as a result the company has had to invest about $50 million to grow its revenue by 2.5X over FY19.  In FY22, the company expects that it will record Rs 550-600 crore in revenue – around a 100 per cent growth over the previous fiscal.

“Even if any of our competitors raise a billion dollars of funding today, they will not have a user base of 25 million eligible BNPL users any time soon. Some of the new companies have two million or three million users,” said Taku.

She added that loan defaults in the BNPL segment have already gone back to pre-Covid levels for Mobikwik.

“This strategy of focusing on sustainable growth has helped the company invest aggressively at the right places i.e., on people and technology without incurring high cash burn and sacrificing growth,” the company said.

According to its DRHP, the fintech company posted losses of Rs 111.3 crore as of FY21, Rs 99 crore as of FY20 and Rs 147.9 crore as of FY19.

Earlier, the fintech company had pushed back its plan of a public listing in November last year to a later date after Paytm’s received a battered debut on the bourses. It had received Sebi clearance for its listing on October 7.

"I think that it is common sense that if the markets are acting erratically then why do you want to risk the outcome of something for which you worked so hard? We have been working very hard for the last 12 years to get to this stage. I cannot think of any internet company which has reached over 10 crore users, having spent only Rs 700 crore. We have reached this stage after hard work so the IPO should be a bumper. We will fight for this only," Taku had said earlier.

In the last round of funding, Mobikwik had raised about $20 million from Abu Dhabi Investment Authority (ADIA) in June of this year, commanding a valuation of about $750 million.

– Mobikwik shelved its Rs 1,900 crore IPO last year after Paytm’s battered debut on the bourses

– The company turned profitable for the first time on a quarterly basis in the three months ending December on a topline of around Rs 150 crore

–   In FY22, the company expects that it will record Rs 550-600 crore in revenue which will mean growth of around 100 per cent over the previous fiscal

– The company said that its revenues grew 86 per cent Y-o-Y for the nine months ending December 2021 to Rs 397 crore

–  Mobikwik has had to invest about $50 million in the past two years to grow its revenue by 2.5x of FY19 level