Mobikwik halves IPO fresh issue | Here are 6 key risk factors from the draft papers

Mobikwik has seen very strong growth in its revenue from operations. In FY22, the company’s revenue from operations has grown 82%. The company made ₹539 crore in revenue from operations in FY23 and has managed to make ₹381 crore in revenue from operations in the first half of FY24 itself.

Mobikwik has been EBITDA loss-making for FY21, FY22, and FY23 but in the first half of FY24 (April To September), the company made an EBITDA profit of ₹21 crore.

On the profitability front, Mobikwik was loss-making for the previous three financial years but in the first half of FY24, it made a net profit of ₹9 crore.

The liabilities of Mobikwik have largely been stable for the past three years. The total liabilities of the company were ₹443 crore in FY21 and at the end of the first half of FY24, the total liabilities of the company stood at ₹534 crore.

Mobikwik said the management/promoters of the company will have broad discretion over the use of net proceeds as against what is disclosed as the intention in the IPO document. According to the IPO DRHP, utilisation of the net proceeds may be subject to change based on various factors. Also, promoters may be required to provide an exit to shareholders who do not agree with the change of objects of issue. The company mentions that it cannot assure that promoters will have the resources to enable an exit opportunity at the price prescribed by SEBI.

Mobikwik says that certain filings with RBI for allotments made to non-resident shareholders have been inadequate in the past. The company has filed a compounding application with the RBI for these inaccuracies. The company has said that it cannot assure you that there are no other instances of irregularities in regulatory filings/allotments.

The company has not been able to obtain any credit rating and hence it may not be able to access capital to finance its operations and future growth. According to the company, non-availability of credit ratings may increase borrowing costs for the company.

Mobikwik has disclosed that certain corporate filings with the Registrar of Companies have discrepancies. The company says that it cannot assure that regulatory proceedings or actions will not be initiated for the discrepancies.

Mobikwik said the company cannot trace certain historical corporate and secretarial records. The company said it cannot assure no legal proceedings or regulatory actions will be initiated for the default.

The Customer Acquisition Cost per user for Mobikwik rose by 78% between FY21 and to first half of FY24. Also, the total customer acquisition cost for the company rose by 83% between FY21 and to first half of FY24.