One Mobikwik’s Financial Performance and Future Outlook
One Mobikwik Systems Ltd., a prominent player in the Indian financial technology [[market]], has recently announced its quarterly results, showing a decline in revenue. The company’s revenue decreased by 7.3% compared to the previous quarter. This drop is steeper than expected, mainly because of a decrease in buy-now-pay-later transactions. Specifically, revenue from financial services fell by 29%.
Positive Growth in Payment Services
Despite the challenges in financial services, One Mobikwik’s payment services segment showed positive growth of 4.7% compared to the last quarter. This growth is supported by the company’s expanding user base. One Mobikwik added 5 million users and 110,000 merchants, driven by offerings like Pocket UPI and Rupay Credit cards. This positive news updates shows the company’s ability to adapt and innovate in the competitive [[market]].
Challenges and Future Opportunities
The company’s operating profit margin is currently at a loss of 19%. This is due to the weak revenue performance in the financial services business. However, there are signs of recovery. The company’s management believes that the worst is over for the financial services segment. Growth in the near term is expected to be driven by ZIP EMI products (backed by DLG) and income from new financial products, like wealth management services. The company’s assets under management (AUA) in wealth management grew by 11% this quarter.
Revised Outlook and Investment Opportunities
A brokerage firm, Dolat Capital, has updated its analysis of One Mobikwik. The firm predicts that the company’s losses may increase in FY25 to Rs 1 billion, up from the previous estimate of Rs 180 million. The firm also lowered its earnings estimates for FY26 and FY27 by 4.1% and 5.4%, respectively. Despite these near-term challenges, Dolat Capital remains optimistic about One Mobikwik’s long-term growth potential. The firm believes that One Mobikwik is well-positioned to benefit from the growth in digital payments and financial product distribution in India. The company plans to use funds from its initial public offering (IPO) to fuel its growth strategy. Given the recent drop in One Mobikwik’s stock price, Dolat Capital has changed its rating to ‘Buy’ with a target price of Rs 700. This implies a valuation of two times enterprise value/sales or an EV/Ebitda multiple of ~65 times.
Disclaimer
It is important to note that this analysis is from an external source. Always consult with a financial advisor before making investment decisions. Research reports provide valuable insights, but they are not a substitute for personalized financial advice.