MobiKwik's Q4 results have sparked intriguing discussions, prompting a closer examination of the company's financial trajectory. The question arises: Why, despite a 58% surge in payments GMV and a 170% increase in UPI transactions, has payments revenue remained stagnant for over a year? This conundrum lies at the heart of MobiKwik's narrative and could significantly influence its future trajectory.
On the surface, the quarter's performance appears promising. MobiKwik achieved EBITDA positivity and a recovery in PAT, with lending margins improving. This shift in focus from payments to a regulated lending and merchant-finance platform is evident through the acquisition of an NBFC license. However, the transition is not yet complete, and the legacy payments business continues to face challenges.
The company's payment take rate has declined from 64 bps to 40 bps in Q4 FY26, a 37% drop in a year. This trend is concerning, as it suggests a broader structural issue within the payments stack. The company's CFO, Upasana Taku, acknowledged that monetisation pressure is not limited to UPI but also affects legacy businesses. This implies that the issue might be more systemic than a temporary revenue dilution.
MobiKwik's strategy revolves around UPI users transitioning to wallets, bill payments, lending, and merchant products. However, this transition is a longer-term argument, and the current-quarter numbers do not reflect significant revenue growth. The company is now viewing UPI as a customer acquisition and engagement tool, aiming to monetise downstream products like lending and merchant payments.
Despite the challenges, MobiKwik has made strides in payments gross margin expansion. Gross margin rose to 39.1% in Q4 FY26, up from 23.9% in Q4 FY25, and gross profit increased by 64% YoY. These gains were primarily driven by lower gateway costs and user incentives. However, the scope for further cost reductions appears limited, and net payments margin is close to its upper limit.
Financial services, MobiKwik's lending business, has shown significant improvement. Gross margin has increased from 4% to 59% over the past five quarters, and the share of Super Prime borrowers has risen to 32%. Delinquency trends have improved, and repeat borrower contribution has increased to 63.5%. The net margin in this vertical has also improved to 5.39% in Q4 from 0.35% a year earlier.
The acquisition of an NBFC license is a pivotal development. MobiKwik aims to evolve beyond payments and become a regulated lending infrastructure platform. This move positions the company as a competitive advantage in the Indian fintech space, allowing it to participate in lending economics more directly. However, this transition comes with increased risks, including capital access, underwriting discipline, regulatory execution, and sustainable balance-sheet management.
MobiKwik's future hinges on successfully reinventing itself as a broader credit-led fintech platform. The company must address the paradox of payments in the Indian fintech space, where scale alone no longer guarantees monetisation. The next few years will be crucial in determining whether MobiKwik can escape the low-monetisation trap and achieve its ambitious goals.
