MobiKwik CEO says focused on profitable growth, reinvesting margins for expansion

MobiKwik said it aims to continue its growth trajectory and solidify its position as a leading player in the Indian fintech ecosystem.

Digital payments and financial services platform MobiKwik's MD and CEO Bipin Preet Singh said the company is now graduating to a more sustainable, profitable growth model and has been re-investing margins back into the business in order to fuel expansion. The company plans to introduce more products and services in the coming years in its pursuit to become a comprehensive fintech platform.

MobiKwik's Rs 572 crore IPO received strong investor interest on the first day, with the issued oversubscribing nearly seven times, and the retail portion getting over 25x bids for the shares offered.

We spoke to Bipin Preet Singh, the MD and CEO of the company to understand the rationale behind the IPO downsizing, company’s future plans, and the growth strategy. Here are the key takeaways:

IPO Downsizing and Rationale

MobiKwik had initially planned to raise Rs 1,900 crore through its IPO in 2021. However, the company revised this to Rs 700 crore in January this year, and later further reduced it to Rs 572 crore, citing the company's progress. When MobiKwik originally planned the IPO in 2021, it had a revenue of Rs 300 crore, and was incurring losses of about Rs 128 crore annually. Since then, the company has grown significantly, with revenue reaching Rs 890 crore in FY24 and has turned profitable.

Bipin Preet Singh said the company is now in a position where it does not need to raise the originally planned Rs 1,900 crore, and is looking at a more conservative amount - Rs 572 crore - reflecting its stronger position.

MobiKwik last raised funds from the Abu Dhabi Investment Authority (ADIA) at a valuation of Rs 5,000 crore in 2021. However, the current IPO is at a valuation of Rs 2,200 crore, which, while lower than its last private round, still reflects the company's growth and profitability. He mentioned that the downsizing reflects a more realistic valuation, based on the current market conditions.

Read More: MobiKwik IPO: Can it put money into investors’ wallets?

Profitability and Financial Outlook

MobiKwik reported Rs 37 crore EBITDA and a Rs 14 crore PAT (Profit After Tax) during last financial year, which Singh described as “unheard of in the fintech industry.” However, the company reported a loss for the first quarter of FY25 due to pre-funding cost adjustments and the impact of interest on debt raised for working capital. Singh emphasized that such fluctuations in quarterly results are common for growth-stage companies like MobiKwik. The company’s margin structure remains strong, with both payments and distribution businesses generating margins in excess of 30%.

Singh added that MobiKwik’s growth trajectory involves continuously reinvesting margins into the business in order to fuel expansion. He assured that the company no longer requires significant cash burn to continue its operations, signalling a shift from its earlier growth-phase model to a more sustainable, profitable growth model.

Growth Strategy and Market Position

MobiKwik has been expanding its fintech ecosystem, focusing on under-served customers who are not adequately served by traditional banks. The company’s key products include MobiKwik Wallet, UPI integration, credit cards, Buy Now Pay Later (BNPL) offerings, and the distribution of financial products like mutual funds, digital gold, and fixed deposits.

The company currently serves over 16 crore registered users and 42 lakh merchants. The MD and CEO pointed out that, even at such a user base, the potential for growth is enormous. Digital payments penetration is still relatively low in India, with less than 20 percent of the population using UPI. This, he said, presents MobiKwik with a significant opportunity for expansion. In the first quarter of FY25 alone, the company added 50 lakh new users, with the annual run rate for acquisition on track to reach 2 crore new users. MobiKwik has also been onboarding new merchants at a rapid pace, adding more than 2 lakh new merchants in Q1FY25 alone.

Plans for Further Expansion

As part of its goal to become a comprehensive digital platform for fintech services, MobiKwik has plans to introduce more products and services in the coming years. This includes continuing to grow its merchant network and further expanding the range of financial products that it offers to customers. Singh indicated that MobiKwik's platform could potentially offer a wide array of new fintech products in the future, including more innovative credit solutions, savings products, and investment opportunities.

The company also holds an in-principle approval from the RBI to act as a payment aggregator and is working towards obtaining a full approval. While there is no specific timeline as to when this approval will come through, MD and CEO Bipin Preet Singh said MobiKwik has already begun onboarding merchants through its payment aggregator platform.

Challenges and Regulatory Landscape

MobiKwik is operating in an environment where regulations around fintech are becoming increasingly stringent. Recently, the RBI has imposed guidelines around unsecured credit products on fintech players, barring peer-to-peer exchanges from offering the instant withdrawal feature.

Bipin Preet Singh expressed confidence that MobiKwik would navigate this regulatory landscape effectively, citing the company’s strong track record of compliance. Singh emphasised that the company’s focus will continue to be on maintaining regulatory compliance while growing the business responsibly.

Regarding the risks of default in products like BNPL (Buy Now Pay Later), the MD and CEO acknowledged that there is inherent risk in unsecured credit, especially to customers not having access to credit. However, he believes the long-term macro trend of increasing credit penetration in India remains strong. While regulatory corrections might slow down the growth of unsecured credit temporarily, Bipin Preet Singh remains optimistic about the long-term potential of the industry.

Read More: MobiKwik IPO subscribed over 5 times on day one

Future Prospects

MobiKwik’s strategy focuses on profitable growth, responsible expansion, and compliance with regulatory guidelines. The company is poised to continue its growth trajectory and aims to solidify its position as a leading player in the Indian fintech ecosystem. By focusing on underserved customers and continuously innovating in digital payments and financial services, MobiKwik is looking to capture a large share of the growing digital payments market in India over the next 5-10 years.

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