Fintech player MobiKwik is projected to have a 35-40% growth over the next couple of years, according to Rahul Jain, director of research of Dolat Capital.
Speaking to NDTV Profit, Jain explained that one of the reasons behind his estimates is MobiKwik’s recent initial public offering proceeds, which have significantly boosted the company’s balance sheet. This capital will support business expansion and help MobiKwik diversify into new revenue streams, he said. The fintech firm went public in December last year.
“We need to keep in mind the IPO inflow of roughly Rs 570 crore. That is a huge amount if you look at the balance sheet of the company prior to the IPO, which was around Rs 850 crore. So that is a good 60-70% jump in the balance sheet size. All of this money will come into some kind of business expansion strategy, as they have already identified in their usage of funds,” he said.
Jain further explained that MobiKwik’s plan is to use the IPO proceeds to enter the devices business, aiming to enhance “stickiness” with its merchant base.
“They have articulated a strategy from the IPO proceeds to get into the devices business. That will also increase a use case and increase stickiness for their merchant base. And that further drives into financial services opportunities for those merchants. So that way, the stage is set…of course, execution needs to be seen and we are hopeful that they will do good justice to the capital that they have raised,” Jain said.
Commenting on its comparison with fintech major Paytm, Jain mentioned that MobiKwik’s focus on expanding its financial services offering will aid the growth. “It’s not that they’re not present in the bigger cities because it’s an old business. Most of the early users all came from tier one, and tier two cities for any wallet kind of use case. If you look at right now, they (MobiKwik) have a significant market in terms of wallet users, that clearly talks about them possessing some high-frequency users as part of their customer pool,” he explained.
MobiKwik’s per-customer value is currently around Rs 400-450, compared to Paytm’s Rs 1,000. Acknowledging this gap, Jain said that there’s room for significant growth. He added that the growing UPI adoption and MobiKwik’s innovative product offerings will allow them to scale in terms of both users and revenue.
“Consumer expansion will happen as UPI penetration for them has started more recently with an innovative product. They have a long way to go in terms of scale, both from user, revenue per customer, and use case perspectives. These are the drivers for our growth estimate looking into the future.”
. Read more on Business by NDTV Profit.MobiKwik’s plan to use the IPO proceeds to enter the devices business, aiming to enhance ‘stickiness’ with its merchant base, the analyst pointed out. Read MoreBusiness
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