After a torrid period for Indian startup stocks which saw the values of listed companies erode over a period of more than two years, happy days seem to be back again for startups at the public markets.
After strong listings by Unicommerce, Ixigo and Swiggy, Mobikwik today went public at the Indian stock markets. Its shares surged on opening day, rising 90 percent over issue price. This gave IPO investors a 90 percent return on their investments in a single day.
Mobikwik’s share had an issue price of Rs. 279. It opened strongly at around Rs. 450, but rallied later in the day end at Rs. 530 per share. This is one of the strongest opening days for an Indian startup stock. Interestingly, Mobikwik’s debut was in stark contrast to fellow fintech player Paytm, which had become the worst-performing large IPO anywhere in the world and had seen its value be nearly halved on opening day.
One of the reasons Mobikwik’s shares did so well was that it had priced its IPO differently from Paytm. While Paytm had priced its IPO at a valuation of $21 billion, significantly above its last private valuation of $16 billion, Mobikwik priced its company at a valuation of just $250 million, while the company had been valued at nearly $1 billion in 2021. This discount made the IPO appealing for investors, who oversubscribed the IPO over 119 times. This discount also seems to have helped Mobikwik’s shares rally at the stock markets on opening day, and doubled the company’s valuation of $500 million.
It’s been long journey towards an IPO for Mobikwik. The company was founded in 2009 by the husband-wife duo of Bipin Preet Singh and Upasana Taku, and operated in the fintech space. It ran a popular wallet, which at one point competed with the wallets offered by companies like Paytm. But the introduction of UPI meant that there was little need left for digital wallets. At that point, Mobikwik pivoted to providing micro-lending options, including “buy now, pay later” (ZIP), personal loans (ZIP EMI), and investment products like mutual funds and digital gold. The company also runs payments services for bills and utilities, and supports merchant payments as well.
The pivot has helped the company’s overall finances. Mobikwik had revenue of Rs. 875 crore, and unlike rivals like Paytm, managed to earn a profit of Rs. 14 crore. Most of the company’s revenue comes from fees charged to merchants for processing payments, while other verticals like microlending, and product placements on Mobikwik’s app also brought in revenue. The company now has over 15 crore users and 38 lakh merchants on its platform.
Interestingly, this was the third time Mobikwik was looking to go public. The company had filed its DRHP twice in the past, but had pulled out both times, once in 2021 after Paytm’s disastrous IPO. But with its shares popping 90 percent on market debut, and the company now being valued at $500 million, Mobikwik seems to have been third time lucky at the public markets.