After a stellar debut, shares of the fintech firm One MobiKwik Systems (MobiKwik) saw a sharp rally, hitting a high of ₹698 within just a few trading sessions post-listing in December, delivering gains of 150 per cent at that peak. However, the momentum didn’t last. The stock has since declined steadily and is now trading in a narrow range close to its issue price of ₹279. A bittersweet performance in FY25 underpins this underperformance. What are the key takeaways? What should you do about the shares? Read on to find out.

We had recommended that high-risk investors subscribe to the IPO on the following rationale. One, the company has a scalable business model operating in India’s fast-growing fintech space. Two, it had demonstrated profitability in FY24, while its listed peer Paytm hadn’t. Three, its valuation on the basis of EV/revenue at 1.8 times FY24 revenue was way cheaper than Paytm’s at 5.6 times. Considering MobiKwik’s modest scale and the crowded fintech landscape, we viewed the lower EV/revenue multiple as a fair entry point.

That said, the company’s FY25 performance was mixed. Here’s what worked in its favour.

Silver linings

For MobiKwik and for any other similar fintech platform, the payment processing business forms the primary funnel for other lucrative businesses such as lending. The metric ‘payments gross merchandise value’ or ‘payments GMV’ effectively captures the value of payments processed. Payments GMV grew 203 per cent in FY25 on an annual basis. About 20.5 million new users registered on MobiKwik’s platform during FY25, taking the registered user base to 176.4 million users, growing at 13 per cent during the year. This translated to a revenue growth of 34 per cent to ₹1,170 crore, following high growth of 62 per cent posted in FY24.

Payment services business (66 per cent of FY25 revenue), the first of the company’s two businesses, grew at a staggering 142 per cent. However, its other business, financial services (lending), declined 28 per cent. This primarily drove the company back into red, as profit dropped from ₹14 crore in FY24 to a ₹122-crore loss in FY25.

Finserv biz disappoints

Three factors, in particular, weighed on performance.

One, since MobiKwik only originates credit while actual disbursements are made by lending partners (NBFCs), its financial services revenue depends directly on how aggressively these partners choose to grow. Given that macroeconomic variables were not encouraging enough in FY25, especially in the unsecured loans segment (the kind MobiKwik originates), its lending partners cut back on disbursements. This had a telling impact on MobiKwik’s digital credit GMV – the metric that tracks the value of loans disbursed. The metric fell 41 per cent in FY25. Consequently, the commission MobiKwik earns also declined, explaining the contraction in revenue for the most part.

Two, the company has discontinued its 30-day loan product, due to its not finding favour with lending partners. The product, which formed two-thirds of digital credit GMV for FY24, fell 52 per cent to account for a little over 50 per cent of a lower digital credit GMV in FY25. This left the company to focus on its other offering in the financial services business – a personal loan with EMI option with a higher ticket size of up to ₹2 lakh.

Three, during the year, MobiKwik adopted the DLG (default loss guarantee) model to adhere to regulatory requirements. Under this model, MobiKwik must upfront set aside up to 5 per cent of each loan it originates for its NBFC partner, to cover potential borrower defaults. Here, costs are upfronted, but revenue trails the cost, creating a timing difference.

What lies ahead

This timing difference can normalise over a few quarters. However, would the lending partners get confident enough to start lending as they have been before this slowdown? This is the more pertinent question that MobiKwik faces. The company does believe that the worst is behind, and things will get better in H2 FY26.

Further, the company is banking on traction from its new launches — a credit card backed by an FD, and a loan against mutual funds. Its nascent payment gateway business too, has headroom for growth (less than 5 per cent of FY25 total GMV).

Given that the stock has already factored in these developments and trades at a trailing EV/revenue multiple of 1.15x (vs Paytm’s 6.3x), high-risk investors may continue to hold the stock, while closely monitoring the financial services business.

Published on June 14, 2025