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MobiKwik Reports Second Consecutive Quarterly Profit
MobiKwik Systems Limited has achieved its second consecutive quarterly profit, signaling a potential operational turnaround after a period of losses. This return to profitability in Q4 FY26 was driven by strict expense management and reduced lending operational costs. The company also obtained a Non-Banking Financial Company (NBFC) license, aiming to expand future revenue streams through lending. However, market reaction suggests these developments haven't fully eased investor concerns, shown by valuation changes among early backers.
Q4 Profit Boosted by Lower Expenses
MobiKwik reported a net profit of Rs 4.38 crore for the quarter ending March 31, 2026, a significant improvement from a Rs 56 crore net loss in the same prior-year period. Revenue from operations rose 8% year-on-year to Rs 289 crore, boosted by commissions from recharges, loan servicing, and payment gateway services. Total expenses were cut to Rs 279 crore from Rs 324 crore a year earlier, with significant reductions in lending operational costs. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) turned positive at Rs 17.4 crore, compared to a Rs 45.8 crore loss a year prior. Despite quarterly gains, full-year FY26 revenue from operations declined about 4% to Rs 1,119 crore, though the annual net loss narrowed to Rs 62 crore from Rs 122 crore. For FY26, the company's book value per share was Rs 66.6, with ROCE at -14.6% and ROE at -32.4%.
NBFC License Positions MobiKwik for Lending Growth
The Indian fintech sector is growing strongly, projected to reach $26.58 billion by 2026, fueled by UPI adoption and a rising digital lending market. However, this growth faces increased regulatory oversight from the Reserve Bank of India (RBI). Recent stricter norms for payment aggregators and digital lending signal a market shift toward compliance and sustainable profitability. MobiKwik's new NBFC license is a strategic move to tap into the digital lending market, building higher-margin revenue streams beyond payment processing fees. This license allows the company to run its own lending business, a key step in a market where scale and varied revenue models are vital for long-term success. MobiKwik remains India's leading Prepaid Payment Instrument (PPI) wallet.
Investor Caution Deepens Amid Stock Plunge and Exit
Despite the reported profit, investor sentiment remains cautious. On May 12, 2026, MobiKwik shares plunged about 11%, wiping out nearly Rs 220 crore in market value. This drop followed news of its Q4 results and NBFC license. An early investor, Peak XV Partners, fully exited by selling its remaining 7.7% stake for about Rs 130 crore. The sale price of around Rs 214 per share was reportedly nearly 70% lower than a previous sale price, raising questions about the company's valuation and growth prospects.
Execution Risks and Revenue Slowdown Cloud Outlook
The shift to in-house lending via its new NBFC license, while aiming for better margins, introduces significant execution risks. The digital lending sector, despite rapid growth, faces strict RBI regulations for consumer protection and responsible practices. Meeting evolving compliance, managing credit risk, and competing with players like PhonePe and Paytm will require significant operational expertise and capital. While quarterly profits are a positive, the full fiscal year saw a 4% decline in revenue from operations. This deceleration raises concerns about growth sustainability in its core payment business, which faces industry-wide margin pressures. Payment processing costs, though reduced, remain the largest expense, accounting for over 41% of total costs.
Future Outlook Hinges on Lending Success and Regulatory Navigation
Looking ahead, MobiKwik's success in building profitable lending operations with its NBFC license will be crucial. The company plans to build growth in merchant acquiring and use AI across operations. Success depends on navigating regulations, demonstrating strong credit underwriting and risk management, and cross-selling services to its user base. The market will watch if MobiKwik can achieve consistent profitability and revenue growth, justifying the investor caution following its latest results.