The much awaited initial public offering (IPO) of the fintech platform company, MobiKwik Systems is scheduled to open on December 11. Ahead of this upcoming IPO, MobiKwik Systems IPO has already generated a buzz in the market, attracting interest from the retail investors to market observers alike.
The company has set a price band for the issue between Rs 265 and Rs 279 per share, which means that the investors can bid for the shares in this range, 265 and Rs 279 per share.
MobiKwik Systems IPO will be available for subscription for a three day period, from December 11 to 13. Investors looking for this offering can apply in lots, with each lot consisting of 53 shares, allowing both the small and large cap investors to participate in the issue.
GMP Status
Prior to the MobiKwik Systems IPO window officially opens, the grey market premium (GMP) has already started to show enthusiasm and appetite for the issue. According to recent trends, the shares of MobiKwik Systems IPO as of 12:04 PM IST is trading at a premium of Rs 130 in the grey market.
MobiKwik Systems IPO review
Though the GMP is positive, some analysts have questioned the valuation and pricing of the issue-
“Over the last three fiscal years, the company has averaged an EPS of Rs – (7.50) (basic) and an average RoNW of – (25.12) %. The issue is priced at a P/BV of 10.06 based on its NAV of Rs 27.74 as of June 30, 2024, and at a P/BV of 2.97 based on its post-IPO NAV of Rs 94.05 (at the upper cap). Considering the FY25 annualized earnings against its post-IPO fully diluted paid-up equity capital,the asking price results in a negative P/E due to Q1 losses,” added Bajaj Broking in an IPO note.
MobiKwik Systems IPO: Key Risks
Some of the key risks highlighted by the company in its Draft Red Herring Prospectus (DRHP) are as follows:
- Uncertainty in Utilisation of Net Proceeds
“Our funding requirements and proposed deployment of the Net Proceeds are based primarily on management estimates and assumptions, and our management will have broad discretion over the use of Net Proceeds. The utilisation of the Net Proceeds may be subject to change based on various factors, some of which are beyond our control. Further, any change or variation in the utilisation of Net Proceeds from the terms and conditions stated in this Draft Red Herring Prospectus shall be subject to compliance requirements, including, among other things, prior Shareholders’ approval,” added the company in the risk disclosure.
- Lack of External Appraisal for Funding Requirements
“Our funding requirements and the proposed deployment of Net Proceeds have not been appraised by any bank or financial institution or any other independent agency,” the company noted.
- Challenges in Sustaining Growth
“We may not be able to maintain the levels of growth, including in our Financial Services business, and our historical performance may not be indicative of our future growth or financial results, which could adversely affect our business, results of operations, and financial condition,” stated the company in the DRHP.
- Difficulty in Customer and Partner Acquisition
“If we are unable to attract new consumers, merchants, or other providers of Financial Services and retain and grow our relationships with our existing consumers, merchants, or Lending Partners, our business, results of operations, financial condition, and future prospects would be materially and adversely affected,” added the fintech platform.
- Intense Competition in the Fintech Industry
“We face substantial and increasingly intense competition in the fintech industry. If we are unable to compete effectively, our business, financial condition, results of operations, and prospects would be materially and adversely affected.”