Mobikwik IPO oversubscribed 119 times, GMP soared almost 60%: What fuelled investor frenzy? | Stock Market News

Mobikwik IPO: A subscription rate exceeding 100 times for a mainboard issue is no small accomplishment. The IPO of One Mobikwik Systems, which opened for subscription on December 11 and closed on December 13, was oversubscribed nearly 120 times, with the stock soaring to a grey market premium (GMP) of ₹166.

Three mainboard IPOs- Vishal Mega Mart IPO, Mobikwik IPO and Sai Life Sciences Limited IPO – concluded last week. All three IPOs were oversubscribed, but the Mobikwik IPO stood out with exceptional demand despite the company operating in a fiercely competitive sector and facing notable business challenges.

As Mint reported, Mobikwik IPO was subscribed 119.38 times on the third and final day, receiving bids for 1,41,72,86,992 shares against 1.18 crore shares on the offer. On the other hand, Vishal Mega Mart IPO was subscribed to 27.28 times and the Sai Life Sciences IPO was subscribed to 10.27 times.

Mobikwik IPO GMP

According to market sources, the latest grey market premium (GMP) for the Mobikwik IPO stands at ₹166. This suggests that Mobikwik shares could debut at ₹445, reflecting a 59 per cent premium over the issue’s upper price band of ₹279.

What fuelled the investor frenzy for Mobikwik IPO?

Experts pointed out four key factors that fuelled investors’ optimism for Mobikwik IPO:

1. Attractive pricing of the issue: The price band for Mobikwik IPO was ₹265 to ₹279 per share. Experts observe that attractive pricing of the issue is a key factor behind investors’ strong response to the Mobikwik IPO.

Brokerage firm Geojit Financial Services pointed out that at the upper price band of ₹279, the Mobikwik IPO was available at an m-cap/sales of 2.5 times on FY24 financials. Thus, the issue appeared reasonably priced.

SBI Securities underscored that the company is valued at FY24 price/sales multiple of 2.5 times based

on the upper price band on the post-issue capital.

2. Healthy growth prospects of the company: The company is a key player in the digital transactions segment, which is expected to grow by over 20 per cent CAGR over the next few years.

As brokerage firm SBI Securities highlighted, “The value of digital transactions stood at $30 trillion in FY24, growing at a CAGR of 19 per cent between FY21 to FY24. This could further grow at a CAGR of nearly 22 per cent between FY24 to FY28 to reach $60 trillion to $70 trillion by FY28.”

“The company is a major player in the mobile wallet and digital lending space. It addresses a substantial untapped market of more than 40 crore individuals in India who require access to financial products but have limited or no credit history,” SBI Securities said.

The strong growth prospects of the company attracted investors with long-term investment horizons.

3. Recent financial performance: Mobikwik turned profitable at the EBITDA and PAT level in FY24. Its revenue has seen a CAGR of 29 per cent over FY22-24.

Brokerage firm Nirmal Bang said that Mobikwik demonstrated exceptional growth, with payment GMV (gross merchandise value) increasing at a CAGR of 46 per cent and MobiKwik ZIP GMV at 112 per cent between FY22 and FY24.

The recent strong financial performance seems to have been a driving force behind the positive reviews from experts and solid public response to the IPO.

4. Brand value: Experts point out that Mobikwik has a strong brand name across large and small Indian cities.

“Its brand is well entrenched in the digital payments landscape, and its consumers associate it with comprehensive digital payment offerings. Its product, Xtra, is witnessing considerable traction. This showcases the amount of trust that its consumers have put in the brand Mobikwik,” brokerage firm SMC Global Securities observed.

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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.