MobiKwik’s Unlisted Valuation Drop 11% After Paytm’s Tepid IPO Listing

The price of unlisted shares of digital payments unicorn MobiKwik has declined 9.7% – 11.6% since the close of the initial public offering (IPO) of Paytm.

The IPO-bound unicorn’s unlisted share price is currently in the range of INR 950 – INR 970, down from around INR 1,075 per share on November 10, when Paytm’s offer closed.

The fall in share price is much higher (27% – 28% decline) when compared to INR 1,300-1,350 a month back. MobiKwik had reported a surge in share price value when it had attained unicorn status after a few employees exercised employee stock option plans (ESOPs).

Its share price has been in the range of INR 950 – INR 970 for the past few days.

The market sentiment is currently weak for the fintech unicorn, majorly due to the subdued response to Paytm’s market debut.

Manan Doshi, cofounder, Unlisted Arena said, “The disappointing response to IPOs of Paytm and Fino Payments Bank largely dampened the sentiments in the unlisted market and MobiKwik shares have corrected to almost 950 level now.”

Paytm’s INR 18,300 Cr IPO (biggest in India’s history) was subscribed 1.89 times.

Post the tepid subscription pace of the offer, its shares also witnessed a drubbing. At the end of the first day (Thursday), its shares were down 27.25% at INR 1,564.15 on the BSE, compared to the issue price of INR 2,150 per share.

Analysts were of the view that the share price of One 97 Communications, which runs Paytm, declined over the persistent profitability and valuation concerns. The company hit the stock exchanges with the issue price of INR 2,150, eyeing a valuation of $20 Bn. However, at the end of the day, the market capitalisation was at INR 1.01 Lakh Cr ($13.64 Bn).

Describing Paytm’s targeted valuation as “exorbitant”, Karan Taurani, Senior Vice-President, Elara Capital, said that post Paytm’s listing, IPO-bound companies would be more cautious regarding the valuations they seek.

Doshi also noted that subdued listing of Paytm may impact upcoming IPOs including MobiKwik and would pressure the companies to price their IPOs reasonably.

Delhi NCR-based MobiKwik received SEBI’s approval for its INR 1,900 Cr offer last month, but it’s yet to announce the IPO timeline. It received the market regulator’s nod around two weeks before Paytm, and was expected to hit the public market before Paytm.

Last month, Fino Payments Bank also made the stock market debut and its shares got listed at a discount of over 5% (November 12), and analysts attributed the weak listing to the ‘high issue price’ of INR 577.

MobiKwik’s offer will consist of a fresh issue worth up to INR 1,500 Cr and an offer for sale from its existing shareholders worth up to INR 400 Cr.

Its offer of sale (OFS) includes the sale of shares worth INR 9.9 Cr by American Express, INR 68.9 Cr from Bajaj Finance, INR 11 Cr by Cisco Systems, INR 94 Cr by Sequoia, INR 24 Cr by Treeline Asia, INR 111 Cr from founders (promoters) such as Bipin Preet Singh and INR 78 Cr from Upasana Taku.

According to its DRHP, Mobikwik’s revenue from operations fell by 18.7% to INR 288.5 Cr in FY21 from INR 355.6 Cr in the previous year (FY20). The company posted a total income of INR 302 Cr in FY21, a drop of 18% from INR 369 Cr recorded in FY20.

Founded in 2009 by Bipin Preet Singh and his wife Upasana Taku, MobiKwik started as a digital wallet but gradually evolved into a horizontal fintech platform that now offers services such as credit, insurance, and gold loans, among others.