fintech – Doz World Matter

India’s tech IPO season is here to stay, as yet another tech IPO sees massive response, despite a rather subdued market sentiment. The IPO of One MobiKwik Systems Ltd., popularly known as MobiKwik, concluded on a positive note on December 13. The Gurgaon-headquartered fintech company has been prominent in India’s growing digital payments landscape, and the firm saw its initial public offering oversubscribed by a total of 119.38 times.

Overall, the response to MobiKwik’s IPO drew interest from all investor categories. Retail individual investors (RIIs), a vital segment in gauging a company’s appeal to the public, oversubscribed their allocated shares 134.67 times. Non-institutional investors (NIIs) also demonstrated robust interest, subscribing 108.95 times their quota, while the Qualified Institutional Buyers (QIBs) portion was booked 119.50 times.

The IPO also attracted bids for over 141 crore equity shares against an offer size of just 1.18 crore shares, while retail participation alone accounted for bids amounting to 27.49 crore shares, far exceeding the allocated 20.50 lakh shares. The allotment of shares for the IPO is expected to be finalized by December 16, while the listing scheduled on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) is set to occur two days later, on December 18.

The Indian fintech firm had priced its IPO in the range of ₹265 to ₹279 per share, with the entire ₹572-crore issue comprising issuance of up to 2.05 crore equity shares. There was no offer-for-sale (OFS) component in this IPO, ensuring all proceeds are directed toward the company’s expansion plans. Post-IPO, the company is expected to achieve a valuation of approximately $250 million, according to a report by The Economic Times.

The IPO’s success was evident in the unofficial grey market as well, where the firm’s shares commanded a premium of ₹158 per share. This translates to an estimated 56% gain over the upper price band of ₹279. For now, the firm plans to use the proceeds from the IPO to further strengthen its presence in the fintech space, including investing in AI, machine learning, and financial and payment services, amongst others.

Speaking more about MobiKwik itself, the firm was founded in 2009 by Bipin Preet Singh and Upasana Taku. Since then, it has grown to become one of India’s leading digital financial services providers, and its portfolio includes a variety of fintech services. This includes digital payments, a buy-now-pay-later (BNPL) offering, and a payment gateway solution, and the company has actively targeted underserved regions, with 72% of its digital loan disbursements occurring in Tier 3 cities and beyond.

Despite reporting a net loss of ₹6.6 crore in the first quarter of FY25, MobiKwik clocked a growth in its operating revenue for the period – it amounted to ₹342.2 crore. Its payment gross merchandise value (GMV) grew at a compound annual growth rate (CAGR) of 45.88% between FY22 and FY24, while its digital loan disbursement platform, ZIP, recorded a CAGR of 112.16% over the same period.

One97 Communications, the parent company of Paytm, has now released its financial results for the third quarter of fiscal year 2024-25. For the three months ended December 2024, the firm noted a net loss of ₹208.3 crore, marking an improvement from the ₹219.8 crore loss recorded in the same quarter the previous year. Alongside this, the firm’s revenue clocked a quarterly growth of 10% to amount to ₹1,828 crore. However, it also marks an annual decrease in revenue – the firm had clocked ₹2,850 crore in revenue in Q3 FY24.

“In Q3 FY 2025, we achieved 10% QoQ revenue growth, due to increase in GMV, healthy growth in subscription revenues and increase in revenues from distribution of financial services. Growth in net payment margin was largely on account of higher subscription revenue. Payment processing margin continues to remain in the guided range. Higher Financial Services revenue was on account of higher share of merchant loans, higher trail revenue from Default Loss Guarantee (DLG) portfolio,” Paytm announced in its official release.

Paytm’s digital payments business continued to be one of the primary drivers behind the firm’s performance – the segment has long been the cornerstone of Paytm’s operations and has shown signs of recovery after a challenging period. Revenue from the payments business increased by 8% compared to the previous quarter, reaching ₹1,059 crore. This growth was largely driven by a higher number of merchant subscriptions and a rise in the gross merchandise value (GMV) processed through Paytm’s platform (the GMV grew by 13% from the previous quarter to amount to ₹5 lakh crore).

Paytm’s financial services business also saw impressive growth in Q3 FY25. Revenue from this segment grew by 34% on a sequential basis, totaling ₹502 crore. This surge was attributed to several factors, including the increase in merchant loans, improvements in collection efficiencies, and higher income from its Default Loss Guarantee (DLG) portfolio. In addition to this, Paytm disbursed ₹3,831 crore in merchant loans during the quarter.

Coming to its other financials, the firm’s EBITDA for the same period (before ESOP), amounted to ₹41 crore, while the net payment margin grew by 5% on a quarterly basis to amount to ₹489 crore. Its total expenses for the quarter amounted to ₹2,219 crore as well, primarily driven by lower employee benefit costs and marketing expenditures. Paytm also sold its stake in PayPay Corporation, a Japanese payments firm, for $280 million (₹2,372 crore) – a development that bolstered its cash reserves, which grew to ₹12,850 crore by the end of December 2024.

“India’s large base of micro, small and medium enterprises (MSME) present a significant opportunity for mobile payments and distribution of financial services. As the leading player in India’s merchant acquiring network, we are uniquely positioned to capitalize on the vast and growing market. To further strengthen our market leadership, we are committed to launching innovative, first-of-its-kind payment devices and solutions tailored to diverse merchant needs. Our extensive distribution and service network positions us well to capitalize on this growing market. We believe that tier-2 and tier-3 cities offer significant penetration opportunities and we will further expand our distribution network to onboard more merchants from these markets,” Paytm noted in its earnings release.

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