The much-awaited initial public offering (IPO) of MobiKwik Systems, a leading financial technology platform, is scheduled to open on December 11, 2024. The IPO has generated significant interest from both investors and market watchers. Here is everything you need to know about the upcoming MobiKwik IPO.
MobiKwik Systems IPO Details
Price band: Rs 265 to Rs 279 per share
Registration period: December 11-13, 2024
Lot size: 53 shares per lot
Investors can participate in the offering by bidding between the price range of Rs 265 to Rs 279 per share. The IPO will be open for subscription for three days, from December 11 to 13. Each lot consists of 53 shares, allowing participation by both small and large investors.
Grey Market Premium (GMP) shows positive sentiment
Ahead of the official IPO window, the grey market premium (GMP) has already started showing interest in the listing. As of 12:04 PM IST, MobiKwik Systems IPO shares were trading at a premium of Rs 130 on the grey market, reflecting positive sentiment.
Concerns over valuation and pricing
Despite the positive sentiment in the grey market, some analysts have raised concerns over the valuation and pricing of the IPO. According to Bajaj Broking in an IPO note:
- The company has posted a dismal earnings per share (EPS) of Rs 7.50 (core) in the last three years.
- The return on net worth (RoNW) was negative at 25.12%.
- The issue is valued at a price-to-book (P/BV) multiple of 10.06 based on a net asset value (NAV) of Rs 27.74 as on June 30, 2024, and a P/BV of 2.97 based on a post-IPO NAV of Rs 94.05 for the large-cap.
- Bajaj Broking points out that due to the company’s first-quarter loss, the selling price is leading to a negative P/E ratio, raising concerns among potential investors.
Key risks highlighted in DRHP
MobiKwik Systems has identified a number of risks in its draft Red Herring prospectus (DRHP). These include:
1. Uncertainty in utilisation of net proceeds
The company acknowledges that its funding requirements and net proceeds are based on management’s estimates and assumptions. The utilisation of the proceeds may vary based on various factors, some of which are beyond the company’s control. Any changes in the use of funds will be subject to shareholder approval.
2. Lack of external assessment
MobiKwik noted that its funding requirements have not been assessed by any bank, financial institution or independent agency, which may raise concerns about the accuracy of its financial projections.
3. Challenges in sustaining growth
The Company recognizes that it may not be able to maintain historical levels of growth, particularly in the financial services industry. Failure to sustain growth could have a material adverse effect on its business, financial performance and long-term prospects.
4. Difficulty in acquiring customers and partners
MobiKwik highlights the challenges it faces in acquiring new customers, merchants and partners for its fintech services. If the Company fails to grow and maintain relationships with existing customers and partners, its financial performance could be adversely affected.
5. Intense competition in the fintech industry
The Company faces significant competition in the fintech industry. If it fails to compete effectively with its competitors, MobiKwik’s business, financial condition and future growth could be at risk.
Conclusion
The initial public offering of MobiKwik Systems has generated significant interest, but potential investors should carefully consider the risks involved, particularly in relation to the company’s growth and valuation concerns. With the IPO subscription opening on December 11, it remains to be seen how investors will react to these risks in light of the gray market movement.