What you must know about the MOS Utility SME IPO

MOS Utility Ltd was incorporated in 2009 in the aftermath of the global financial crisis to provide value added digital products and services. Currently, MOS Utility Ltd provides digital products and services in the B2C, B2B, and financial technology fields. Essentially, MOS Utility Ltd is a business enabler as its services provides business expansion and enhancement opportunities to shopkeepers, retailers, students, housewives, professionals, and insurance agents. MOS Utility Ltd empowers these people to start their own online e-commerce business and have a profitable business line to manage.

At a broad level, MOS Utility Ltd has 7 key business segments. These include, banking, travel, insurance, utility, entertainment, franchisee, and miscellaneous services. It largely operates through a network of network partners. As of date, its total network comprising of agents and master distributors add up to over 1.68 lakhs. The predominantly digital acquisition and servicing platform makes the costs much lower, technology driven and also scalable without too much of additional investments.

In the last few years, MOS Utility Ltd has emerged as among the fastest growing Fintech companies in India. MOS utility Ltd has shifted towards indigenous solutions for the unorganized sector; which has largely been outside the mainstream markets and digital enablement allows this gap to be bridged in a seamless manner. That is the space that MOS Utility operates in; offering huge potential for smaller businesses to grow rapidly, in an economical manner; digitally. The fresh issue portion will be used to fund its working capital expenditure.

Key terms of the SME IPO of MOS Utility Ltd

Here are some of the highlights of the MOS Utility Ltd IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 31st March 2023 and closes for subscription on 06th April 2023; both days inclusive. This extended time line is due to a slew of holidays coming in between.
   

• The company has a face value of Rs10 per share and the SME IPO of MOS Utility will be a combination of fresh issue and an offer for sale (OFS). The price band for the book built IPO has been set in the range of Rs72 to Rs76 per share.
   

• The overall issue of MOS Utility Ltd will comprise of 65.744 lakh shares, which at the upper end of the price band of Rs76 will aggregate to Rs49.97 crore. This will include a fresh issue of 57.744 lakh shares, which at the upper band of Rs76, aggregates to Rs43.89 crore. The OFS portion will entail the sale of 8 lakh shares valued at Rs6.08 crore at the upper end of the price band of Rs76 per share.
   

• The company has allocated 50% of the issue size for the QIB segment, 15% for the HNI / NII segment and 35% for the retail investors. This will be on the net offer, after excluding the market maker allocation for the SME IPO issue of MOS Utility Ltd.
   

• The minimum lot size for the IPO investment will be 1,600 shares. Thus, retail investors can invest a minimum of Rs121,600 (1,600 x Rs76 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 3,200 shares and having minimum value of Rs243,200. There is no upper limit on what the HNI / NII investors can apply for. The allocation can be summarized as under.

Application	Lots	Shares	Amount
Retail (Min)	1	1600	₹121,600
Retail (Max)	1	1600	₹121,600
HNI / NII (Min)	2	3,200	₹243,200

• Like every SME IPO, this issue also has a market making portion with an allocation of 329,600 shares. Rikhav Securities Ltd will act as the market maker to the issue providing two-way quotes to ensure liquidity on the counter.

• The company has been promoted by Chirag Shah, Kurjibhai Rupareliya and Sky Ocean Infrastructure Ltd and the promoter stake in the company stands currently at 82.91%. Post the IPO, being a fresh issue of shares cum an offer for sale (OFS), the promoter stake will be get diluted proportionately.

While Unistone Capital Private Ltd will be the lead manager to the issue, Skyline Financial Services Private Ltd will be the registrar to the issue.

Key dates to be aware of in the MOS Utility Ltd IPO (SME)

The SME IPO of MOS Utility Ltd opens on March 31st, 2023 and closes on April 06th, 2023. The MOS Utility Ltd IPO bid date is from March 31st, 2023 10.00 AM to March 16th, 2023 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5.00 PM on the issue closing day; which is the 06th April 2023. Here is a quick gist of the important dates that investors need to be aware of in the SME IPO of MOS Utility Ltd.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account. Being an NSE-SME IPO, MOS Utility will only be listed on the NSE SME segment.

Financial highlights of MOS Utility Ltd

The table below captures the key financials of MOS Utility Ltd for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

The profit margins of MOS Utility Ltd have been fairly low and the sales growth has been quite erratic. However, the company has an established model with a rapidly growing market in the Indian context with the rapid rate of digital adoption. However, investors must remember that this is a traditionally low margin and even long gestation business. That could be an overhang on valuations; so, this issue would be more suited to investors with a higher risk appetite.