Paytm’s Flop Performance May Strike MobiKwik’s Unlisted Shares

By Angel One | Published on 24th November 2021 | 10

Paytm’s dismal listing and continued insufficiency in the stock market has weakened investor sentiments for its rival MobiKwik. According to analysts, the flop performance of Paytm will most likely affect the initial share sale of MobiKwik.

Here are more details on this topic.

What’s the Speculation All About?

During the initial nine months of 2021, Indian firms have generated around $9.7 billion through their public offers. Accountants believe that these figures are the highest tallies concerning the last two decades.

However, upcoming IPOs, which are planned to float later this year, like MobiKwik, will face certain questions after Paytm’s debut fall of more than 27%.

Experts believe this episode will probably bring some reality to valuations that promoters seek from public markets.

Consequently, MobiKwik has decided to delay its IPO. Responding to an email query, a spokesperson said that the company would not like to respond to any speculations. It further mentioned that MobiKwik would go public at an appropriate time after becoming confident of having a successful IPO.

As of One97 Communications Ltd, its shares witnessed a downfall of 27% during its market debut on 18 November 2021. From its IPO price of Rs. 2,150 per share, Paytm’s shares have fallen 36.37%. This huge sell-off has wiped-off investor wealth of around Rs. 51,194 from the IPO valuation of around Rs. 1.39 trillion.

This timid response of fintech IPOs of Fino Payments Bank and Paytm set off this downfall, which was further accelerated by the devastating listing of Paytm.

The mega IPO of Paytm was subscribed only 1.89 times. On the other hand, Fino Payments Bank IPO was subscribed 2 times.

A Quick Look at MobiKwik IPO

One MobiKwik Systems Ltd filed its DRHP with SEBI in July 2021 and received the market regulator’s nod in October. With its IPO, the company aims to generate around Rs. 1,900 crores. This initial share sale will consist of fresh share issuance of Rs. 1,500 crores and an offer for sale of Rs. 400 crores.

MobiKwik plans to utilise the net proceeds from this public offer for the following purposes:

  • Funding organic growth opportunities, and
  • General corporate purposes

MobiKwik generates revenues mostly through its consumer payments business, buy now pay later product and payment gateway. Unfortunately, all these segments were severely affected by the pandemic.

The below table represents the financial summary of MobiKwik, which will help investors make an informed decision:

FY Ending on Total Assets (in Millions) Total Revenue (in Millions) Profit After Tax (in Millions)
March 2019 Rs. 3,350.84 Rs. 1,602.32 Rs. (1,479.73)
March 2020 Rs. 3,379.36 Rs. 3,698.54 Rs. (999.20)
March 2021 Rs. 4,231.39 Rs. 3,022.56 Rs. (1,113.00)

Bottom Line

Surrounding these speculations, market analysts believe that approaching IPOs, which have witnessed considerable demand, may decline upon listing. This may cool down the excitement that was prevailing in the IPO market recently regarding massive subscriptions and listings.

 

Frequently Asked Questions

  1. What was the issue size of Paytm IPO?

The issue size of Paytm IPO was Rs. 18,300 crores.

  1. What is the face value of MobiKwik shares?

The face value of MobiKwik shares is Rs. 2 per equity share.

  1. Who are the lead managers on MobiKwik IPO?

MobiKwik IPO lead managers are ICICI Securities Limited, BNP Paribas, Credit Suisse Securities (India) Private Limited, Jefferies India Private Limited and IIFL Securities Ltd.