Indian financial technology giant, MobiKwik, has seen an overwhelming response to its Initial Public Offering (IPO), with the entire offering of Rs 572 crore ($67.4 million) being fully subscribed in just the first hour of the offering's opening on Wednesday. This reflects the increasing investor confidence in MobiKwik's growth prospects, driven by India's rapidly expanding online payments market.
As of 1 p.m. IST, the overall subscription for the IPO stood at 3.4 times the number of shares being offered—11.9 million. Retail investors, in particular, displayed a keen interest, with their portion being subscribed more than 14 times over, while non-institutional investors also placed bids that were three times the portion allocated to them.
This surge in demand highlights the strong investor confidence in MobiKwik’s market position and its prospects in the fast-growing fintech sector.
On the eve of its IPO opening, MobiKwik secured anchor investments amounting to Rs 257 crore. Anchor investors include Norway’s sovereign wealth fund, Norges, along with HDFC Mutual Fund and Quant Mutual Fund. Importantly, the company’s existing investors are not selling any shares as part of this offering. MobiKwik’s ability to attract high-profile investors further underscores the market's faith in its long-term prospects.
The rapid increase in smartphone usage in India has led to a surge in online transactions, with millions of Indians now using digital payments for everyday purchases, from groceries to flight tickets. MobiKwik, which provides both a payment gateway solution and consumer-facing services such as loans, is well-positioned to benefit from this growth.
According to PwC, the total value of digital payment transactions in India is expected to rise significantly, reaching Rs 593 trillion by the fiscal year 2028-29, more than double the Rs 265 trillion recorded in the fiscal year 2023-24.
One of the key factors driving the high demand for MobiKwik's shares is a substantial grey market premium, estimated at around 50% above the issue price. Grey market premiums are a key indicator of how stocks may perform when they start trading on the exchange, and the strong premium has been attracting retail investors who are hopeful for a profitable listing.
"The primary reason for a quick oversubscription is a strong grey market premium of about 50 per cent to the issue price, a good listing pop is expected," said Arun Kejriwal, founder of Kejriwal Research.
MobiKwik is offering its shares in the price band of Rs 265-279 per share, targeting a valuation of Rs 2,168 crore through this IPO. The offer period runs from December 11-13, and the stock is expected to begin trading on the Bombay Stock Exchange (BSE) on December 18.
India's IPO market has experienced a boom in 2024, with nearly 300 companies raising over $15 billion in funds, more than double the amount raised in the same period last year, according to data compiled by LSEG. Despite recent market fluctuations, investor enthusiasm for IPOs, particularly in the technology and fintech sectors, remains high.
MobiKwik had initially filed for a much larger IPO of Rs 1,900 crore in July 2021. However, the company postponed its plans following the disappointing market debut of its larger rival Paytm. Since then, MobiKwik has reworked its IPO strategy and scaled back its offering by 70%, reflecting a more cautious approach.
Analysts attribute the strong demand for MobiKwik's IPO to several factors, including successful listings in the tech sector, such as the IPO of Swiggy, and a recent recovery in Paytm's share price. These developments have helped rebuild investor confidence in the tech and fintech sectors, which in turn is boosting sentiment around MobiKwik’s market debut.
Kranthi Bathini, director of equity strategy at WealthMills Securities, noted, "Successful listings in the technology space, including that of food delivery platform Swiggy, and a revival in Paytm's shares from lows is boosting sentiment."