Mobikwik: Riding the Fintech Wave Amidst Challenges

Brokerage Free Team •December 25, 2024 | 4 min read • 20 views

One Mobikwik Systems Ltd., a leader in India’s fintech ecosystem, is known for its dual-sided payments platform catering to consumers and merchants. Its offerings span payment services and financial products, including pay-later solutions and merchant loans, marking it as a versatile player in the industry. Below is a detailed analysis of the company, its financial metrics, technical aspects, and industry positioning.

1. The Industry Overview

 

The fintech industry in India has witnessed exponential growth, driven by government initiatives like Digital India and increasing smartphone penetration. The sector is expected to grow at a CAGR of 22.7% from 2023-2028, supported by rising adoption of digital payments, embedded finance, and innovative lending models. Companies like Mobikwik are strategically placed to benefit from these trends, though they face stiff competition from giants like Paytm (One97 Communications) and PhonePe.

 

2. Historical Price Performance

 

Time One Mobikwik Systems Ltd. Nifty50 Returns Sensex Returns Industry Returns Sector Returns
1 Day 15.2% -0.11% -0.09% 0.01% -0.07%
1 Week 118.24% -3.81% -4.01% -1.23% -4.28%
1 Month 118.24% -0.75% -0.81% 10.94% 2.96%
3 Months 118.24% -8.53% -7.6% 11.95% 3.48%
6 Months 118.24% 0.96% 1.64% 51.36% 24.4%
1 Year 118.24% 11.14% 10.36% 86.97% 36.69%
3 Year 118.24% 38.98% 36.91% 158.62% 58.37%
5 Years 118.24% 93.49% 88.44% 568.23% 297.76%
10 Years 118.24% 187.02% 185.29% 896.71% 442.62%

 

- Price Evolution: Mobikwik’s stock price has delivered a 118.2% return over the past year, reaching a high of ₹630 and a low of ₹440. The current price of ₹608.9 reflects a significant rally, yet the valuation metrics suggest overpricing.

 

- Volatility: The stock has shown considerable volatility, making it appealing for short-term traders but risky for conservative investors.

 

3. Valuation Metrics

 

- Valuation Score: The company’s valuation score of 1/100 highlights expensive pricing. The Price-to-Book ratio stands at 29.1, significantly higher than industry peers.

 

- Comparison with Peers: Competing firms like Info Edge and One97 Communications offer better valuation scores, making them relatively more affordable investment options.

 

4. Financial Metrics

 

Metric Value Comments
Revenue Growth (YoY) 58.7% Demonstrates strong scalability in a competitive market.
Net Profit Margin 1.6% Low profitability compared to peers, signaling room for margin improvement.
Debt-to-Equity Ratio 0.3 Indicates manageable leverage.
ROE (Return on Equity) 8.7% Moderate but below top-performing peers in the fintech space.
Working Capital Growth 242.9% Reflects improved liquidity and operational efficiency.

 

5. Technical Analysis

 

- Momentum: The stock is technically bearish, trading above only one short-term SMA (5-day SMA: ₹539).

 

- Pivot Level: ₹590.65

 

- Key Support Levels: ₹551.3 (S1), ₹493.7 (S2)

 

- Key Resistance Levels: ₹648.3 (R1), ₹745.2 (R2)

 

6. Volume Analysis

 

- Average Daily Volume: 67.4 million shares, suggesting active market participation.

 

- Delivery Volume: Recent daily delivery volumes averaged 12.3%, reflecting higher speculative interest than long-term holding.

 

7. Peer Comparison

 

Stock Current Price PE TTM Price to Earnings Market Capitalization Dividend yield 1yr % Net Profit Qtr Net Profit Annual YoY Growth % Operating Revenue Qtr Revenue Growth Qtr YoY % Price to Book Value
One Mobikwik Systems.. 608.9   4730.32 0.00% -6.62 116.80% 342.27   29.1
Info Edge (India) Ltd. Market Leader 8673.05 240.33 112388.94 0.28% 23.26 635.53% 700.82 11.98% 3.55
PB Fintech Ltd. Market Runner Up 2058.5 451.25 94530.6 0.00% 50.67 113.75% 1167.23 43.81% 16.09
One97 Communications.. 982.55 -92.1 62626.03 0.00% 928.3 20.21% 1659.5 -34.11% 4.71
Affle (India) Ltd. 1779.25 72.89 24992.64 0.00% 91.99 21.54% 542.88 25.87% 10
IndiaMART InterMESH .. 2245.45 31.3 13479.91 0.89% 135.1 17.66% 347.7 17.98% 7.76
Tanla Platforms Ltd. 670.4 16.66 9024.75 1.79% 130.21 22.49% 1000.72 -0.78% 4.65

 

Mobikwik outshines peers in revenue growth but lags in profitability and valuation metrics.

 

8. Shareholding Pattern

 

- Promoters: 25.2% ownership, signaling confidence but leaving room for institutional influence.

 

- Public: 51.5%, reflecting significant retail investor interest.

 

- Institutional Stake: Low FII (9.0%) and DII (14.3%) holdings, indicating limited large-scale institutional backing.

 

9. SWOT Analysis

 

Strengths Weaknesses
1. Impressive Revenue Growth: A YoY growth of 58.7%, surpassing industry benchmarks. 1. Low Profit Margins: 1.6% margin limits financial flexibility and investor appeal.
2. Diverse Product Portfolio: Offerings include payments, pay-later options, and merchant loans. 2. Overvaluation: High valuation metrics deter value-conscious investors.
3. Manageable Debt Levels: A debt-to-equity ratio of 0.3 provides financial stability. 3. Technical Weakness: Momentum indicators suggest bearish trends.
4. Scalable Business Model: Potential for expansion into underserved Tier-II and Tier-III markets. 4. Minimal Institutional Support: Low FII and DII interest may limit long-term price stability.
Opportunities Threats
1. Digital Payment Adoption: Growing fintech penetration in India offers vast market potential. 1. Regulatory Risks: Potential changes in financial regulations could impact business operations.
2. Credit Portfolio Expansion: Products like ZIP EMI have untapped growth potential. 2. Fierce Competition: Dominance of Paytm and PhonePe poses challenges.
3. Tech-Driven Innovations: AI and machine learning can enhance fraud detection and customer service. 3. Macroeconomic Factors: Economic downturns could reduce transaction volumes and consumer spending.
4. Strategic Partnerships: Opportunities for collaborations with banks and NBFCs for new products. 4. Market Sentiment: Bearish trends and low technical scores may deter investor interest.

 

10. Final Words

 

Mobikwik has carved a niche in India’s booming fintech industry, with strong revenue growth and diversified offerings. However, its high valuation, low profitability, and bearish technical indicators raise concerns. Strategic focus on enhancing margins, improving institutional participation, and leveraging technological advancements could unlock further growth. Investors should approach cautiously, balancing growth potential with associated risks.

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