MobiKwik cut IPO size due to higher FY24 revenue: Co-founder Upasana Taku

A priority for the company is scaling its payments beyond current levels by acquiring new customers, launching new products, and focusing on offline merchant acquisition

MobiKwik, the fintech firm gearing for its listing, reduced its initial public offering (IPO) size this year as compared to its 2021 plans, on the back of higher operational revenue and a shift towards positive earnings before interest, taxes, depreciation, and amortisation (Ebitda) in financial year 2024 (FY24), a senior company executive said.

 

The Gurugram-based company refiled its draft red herring prospectus (DRHP) in January when it disclosed its plans to raise Rs 700 crore through an IPO. This is about 63 per cent lower than its 2021 target of raising Rs 1,900 crore, which it abandoned citing weak market conditions.

 

 

“In FY24, we touched about Rs 890 crore in revenue, which is roughly about Rs 1,000 crore. From here, it is not a 10x jump to reach Rs 5,000 crore in revenue. It would need a 5x growth instead. We need less (cash) to reach that scale,” reasoned Upasana Taku, co-founder and chief financial officer (CFO), MobiKwik, in an interaction with Business Standard. 

 

In FY21, the company’s revenue from operations stood at Rs 288.5 crore with a loss of Rs 111.3 crore, as per data from its DRHP filed in January. In contrast, the fintech earned Rs 890.32 crore in revenue from operations and posted a profit of Rs 14.08 crore in FY24.

 

Her rationale of cutting the size also rests on a “realistic market” in 2024 as compared to “bubbly valuations” in 2021.

 

“2021 was a super bull market to the extent that valuations were bubbly and there was a lot of froth. We came at the end of the year, and also behind the listing of another fintech player which crashed on listing. 2024 is a better time since it is a realistic market appreciating growth and profitability,” she said.

 

One97 Communications, the company that operates brand Paytm, debuted on the exchanges in 2021 at a 9 per cent discount to the issue price of Rs 2,150.

 

Out of the Rs 700 crore it plans to raise, MobiKwik will use Rs 250 crore to fund its financial services business, Rs 135 crore for financial and payment services business, and Rs 135 crore for investment in data, artificial intelligence and machine learning (AI/ML) as well as product and technology.

 

It will utilise about Rs 70 crore for capital expenditure for its payment devices business and general corporate purposes.

 

Taku hinted that the company's revenue from payments is expected to increase out of its mix for financial services and payments.

 

“In FY24, financial services was about 55-60 per cent and payments was 40-45 per cent. This year, the share is slightly increasing because payments are growing fast,” she added. 

 

A priority for the company would be scaling its payments beyond its current levels by acquiring new customers, launching new products, and a focus on offline merchant acquisition.

 

“We were not taking an important role in the whole offline merchant acquisition, which we are doing now by deploying soundboxes, electronic data capture (EDC) machines, and in merchant loans,” she added.

 

As of September 2023, the company had 146.94 million registered users and around 3.81 million merchants, as per its DRHP data.