The closing of the initial public offering (IPO) of fintech giant Paytm impacted the unlisted share pricing of the digital payment unicorn MobiKwik; the reported decline was between 9.7-11.6 %. As per the Mint’s report, investor sentiment for smaller unlisted fintech rival MobiKwik has been negatively impacted by Paytm's weak debut and ongoing performance. The Paytm IPO crash affected the unlisted shares of the financial company, as the market is at a dip; it is the best time to leverage by investing in MobiKwik’s unlisted shares and Paytm shares and earning significant returns.
Paytm IPO Failure - Flaw In Business Model Or Wrong Timing?
As a fintech company, Paytm gained immense popularity by bringing facilities like mobile recharge, money transfer, bill payment etc., to the fingertips. Vijay Shekhar Sharma, founder and CEO of Paytm, a small-town boy with big dreams, started Paytm to solve the daily payment problems among individuals and vendors. The amazing features of the Paytm application were the reason behind the popularity of the app. With fantastic financials and a business model, Paytm went for the IPO but failed miserably.
One97 Communications Ltd, the parent company of the fintech app Paytm, lost 27% of its share on the day of listing. The ₹ 18,300 crore IPO raised huge expectations among domestic retail investors. However, investors were taken aback when the stakes were placed on the stock exchanges at a discount.
Offloading By Promoters and Hedge Funds
The company’s plan was to raise a total of ₹18,300 crores via IPO. ₹ 8300 crore goes directly into the company’s pocket, while the ₹ 10,000 crore goes to the promoters. But at the start of the month, it was obvious that there would be an IPO disaster. Jack Ma’s Antfin Holding B.V, Alibaba Group and Softbank Group Sold most of their shares. Some promoters and hedge funds were among the other offloaders. Similarly, venture capitalists also offloaded their stakes from the company as they avoid playing on smooth grounds.
Issue With Pricing
As per the finance experts, the IPO was priced high initially. Due to the increased firm valuation, the IPO's grey market pricing was offered at a significant discount.
Siji Philip, Senior Research Analyst at Axis Securities, said, "Globally, profit-making payment companies are trading at median nine-times of future earnings, whereas One97 Communication, a loss-making company, is valued at 49.7-times its FY21 revenues.”
The Macquarie report revealed that Paytm's valuation, at almost 26 times the expected price to sales for FY23, is high, particularly given how elusive profitability has been for a while. According to the survey, the majority of fintech companies trade at a price-to-sales ratio of 0.3 to 0.5.
Competition Among The UPI Applications
Paytm’s future business expansion is disrupted by the Unified Payment Interface (UPI), a real-time money transferring and receiving system developed, maintained and regulated by the government-backed National Payments Corporation of India (NPCI). In December 2019, UPI was launched for customers and merchants, contributing 65% of Paytm’s gross merchandise value; the number is expected to rise to 86% by the end of 2026. Expert investors advise staying away or only investing when it comes down to the range of ₹ 1,100-1,200, which is still risky.
Receding Liquidity
Another reason for Paytm’s IPO failure is the draining of liquidity from the capital markets. Before the launch, Nifty fell 840 points in one month, and most foreign institutional investors were offloading their stakes. Paytm’s IPO size was huge, the company planned to raise ₹ 18,300 crores, but the market couldn't handle such a massive listing. The receding liquidity is one of the significant reasons why Paytm’s IPO flopped.
Paytm IPO Impact On MobiKwik’s Unlisted Shares
Initially, the Paytm stock was issued at ₹ 2,150; during the listing, the price dipped to ₹ 1,950. The prices rose to ₹ 1,955 and then recorded a continuous decline. At the time of closing, the stock was at ₹ 944.50; from listing to closing, the stock prices had been halved.
After the public issue of Paytm, Madhur Deora, CFO of Paytm, said, “A higher valuation could have been achieved, but we decided to price it at a level where everyone makes money.”
Madhur’s statement came out to be a joke when Paytm announced its December quarter results, and the losses widened to ₹ 780 crores, which was previously ₹ 520 crores.
Before Paytm's initial public offering (IPO), MobiKwik's stock was trading at a peak of ₹ 1,350 a share. But due to the poor response to Paytm’s IPO, MobiKwik’s shares were severely impacted, and its value was reduced by 33% and came down to ₹ 900 a share.
“As per company policy, we don’t respond to any market speculation. MobiKwik has got regulatory approvals for its IPO and will go public at an appropriate time," a MobiKwik representative stated in response to an email query.
One97 Communications Ltd., the parent company of leading Indian mobile payments application Paytm company, saw a 27% decline in share price. Since the IPO, the shares' price has dropped 36.37% from ₹ 2,150 per share. The abrupt sell-off has reduced investor value by ₹ 51,194 crore from the IPO valuation of ₹ 1.39 trillion. The collapse was brought on by the discouraging reception to Paytm and Fino Payments Bank's IPOs, which was hastened by Paytm's poor listing.
The fintech giant One Mobikwik Systems Ltd has already filed and drafted the papers and received a green signal from the Securities and Exchange Board of India. Its initial public offering (IPO) would include the sale of new shares worth ₹ 1,500 crores and a stock offer from its founders and owners for ₹ 400 crores.
MobiKwik wants to utilise the public offerings and use the funding for organic growth opportunities and general growth purposes. Being a successful fintech company, MobiKwik’s vision is to scale its services and seek more growth and revenue.
MobiKwik's revenue is generated by its payment gateway services, customer payments and BNPL services. During the pandemic, its services were severely impacted, and the company’s revenue dipped by 19% to ₹288 crores, which was ₹ 357 crores. But the fintech firm bounced back, rose its revenue by 80% to ₹ 543.2 crores in FY22 and is planning an IPO.
Financial Highlights Of MobiKwik
The following table shows the financial stats of MobiKwik -
| Particulars | 2018-19 | 2019-20 | 2020-21 | 2021-22 |
| Total income (₹ crores) | 160.40 | 369.90 | 302.26 | 543.22 |
| PAT (₹ crores) | -137.76 | -79.49 | -111.30 | -128.16 |
| Diluted EPS | -1376.41 | -791.00 | -22.18 | -23.04 |
| Book Value per Share (₹) | -6.50 | -124.46 | -77.30 | 37.87 |
| Equity (₹ Crores) | -1.57 | -30.85 | -20.01 | 216.54 |
Is MobiKwik’s Unlisted Shares A Better Investment Option?
As a result of Paytms IPO, Mobikwik’s shares have been severely impacted. Investors should be very cautious while investing in any fintech company. However, the market dip also brings an opportunity for investors to leverage it and generate a quick return on investment. Investing in Paytm’s shares, MobiKwik's unlisted shares or any other shares is considered a high-growth investment and a great way to diversify the risks. You can make massive profits by investing in unlisted shares, which are widely known for their high ROI value.
Due to a decline in the market, Mobikwik unlisted share price is reduced. So, it's the best time for investors to purchase their shares at a low price and seek higher returns. You can trade MobiKwik unlisted shares at Stockify. It is one of the best online stock brokerage platforms that allows you to buy and sell unlisted, delisted and pre-IPO shares and ESOPs. Moreover, you will also get access to unlisted stocks of blue chip companies not yet listed in the stock market. Connect with the experts today.
FAQs
Q1 - What are the open and close dates of the Mobikwik IPO?
Ans - The IPO date of Mobikwik has not been announced yet. You can use Stockify to stay updated with MobiKwik’s IPO details.
Q2 - What is the MobiKwik shares' face value?
Ans - MobiKwik shares have a face value of Rs. 2 per equity share.
Q3 - How to buy MobiKwik unlisted shares?
Ans - For buying and selling MobiKwik unlisted shares, you can contact the expert brokers at Stockify - India's leading online brokerage platform.
Q4 - Are SEBI rules and regulations applicable to Mobikwik shares?
Ans - Securities & Contract (Regulation) Act, which is under the SEBI, governs the dealing in unlisted shares.
Q5 - How to check Paytm share price in India?
Ans - To check Paytm share price, you can use Stockify, India's trusted online brokerage platform. Connect with our experts today.
