Mobikwik’s FY24 profit helped cut IPO size: CEO Bipin Preet Singh

Mobikwik had reduced its IPO size from its earlier plans of Rs 1,900 crore in 2021 to Rs 700 crore in January this year to now Rs 572 crore. Its leadership cites improved financial performance and strategic adjustments behind the move.

"The company has become profitable, as you can see, and is not loss-making... This has allowed us to reduce the IPO size significantly," Co-founder Bipin Preet Singh said during a press conference.

For the financial year ended March 31, 2024, the company recorded a profit of Rs 14.08 crore.

Mobikwik recent turn towards profitability has bolstered its confidence in the success of its IPO. “We believe our core values of balancing profitability with growth will resonate with retail investors,” Co-founder Upasna Taku told YourStory on the sidelines of the conference.

The narrative seems to be working as at the time of writing this article, the retail portion of Mobikwik's IPO was already subscribed 22X, just hours after opening bids for its public issue.

While the company posted a loss of Rs 6.6 crore in Q1 FY25, leadership remained confident in sustaining long-term profitability. The company has reduced its fixed costs from 47% to 30% of revenue and achieved improved gross margins—19% for the full FY24 and 16% in Q1 FY25.

A key revenue generator for Mobikwik is its role as a digital distributor of financial products. The company offers services such as MobiKwik ZIP and ZIP EMI, enabling users to activate credit limits or secure loans in partnership with banks and NBFCs. These collaborations allow Mobikwik to avoid regulatory costs while earning distribution fees.

Mobikwik also plans to provide investment and insurance products, including mutual funds, digital gold, and provident fund-linked offerings. Additionally, its merchant cash advance product facilitates loans to small businesses, expanding its financial services portfolio.

Payments remain Mobikwik’s core business, contributing significantly to its revenues. By facilitating digital payments for over 161 million users and 4.26 million merchants, the company earns transaction fees, particularly from bill payments and mobile recharges. "We added about two lakh new merchants in Q1 FY25 alone, and among these, 60,000 to 70,000 deployed sound boxes," said Anand Kumar, Head of Strategy at Mobikwik.

From its IPO proceeds, Mobikwik is going to earmark approximately Rs 150 crore to grow its merchant payments business. It will also focus on partnerships with billers and merchants, enabling it to penetrate deeper into Tier II and non-metro markets, where competition remains limited.