PhonePe Sets Sights on $9-10.5 Billion Valuation for Landmark India IPO
Walmart-backed fintech giant PhonePe is gearing up for a significant public offering in India, targeting a valuation between $9 billion and $10.5 billion, which translates to approximately Rs 75,000 crore to Rs 87,000 crore. According to sources familiar with the development who spoke to news agency PTI, the company plans to raise around $1.05 billion through an equity sale in this highly anticipated IPO.
Valuation Adjustments and Market Context
This expected valuation marks a reduction from PhonePe's last funding round in 2023, when it secured $100 million at a $12 billion valuation. Despite this adjustment, the proposed public issue is poised to become the second-largest fintech IPO in India, trailing only behind rival Paytm, which debuted with a valuation of about $20 billion in November 2021.
Offer-for-Sale Structure and Key Stakeholders
The PhonePe IPO will be structured entirely as an offer-for-sale (OFS) by existing shareholders. Updated draft papers reveal that major investors, including Walmart, Tiger Global, and Microsoft Global Finance, intend to offload stakes worth approximately Rs 10,115 crore, or about $1.1 billion, through this public offering.
Specifically, PhonePe promoter WM Digital Commerce Holdings Pte plans to sell 45,942,496 shares out of its total 371,517,890 shares, representing roughly a 12% stake in the company. This OFS is priced at Rs 1,996.8 per share, based on the weighted average cost of acquisition per equity share. Notably, Microsoft and Tiger Global are also planning to exit the firm via this IPO.
Timeline and Market Conditions
PhonePe filed its draft papers for the IPO in September and aims to conclude the process by April, contingent upon favourable market conditions and the absence of major disruptions from ongoing military conflicts in the Middle East.
Strong Financial Performance and Growth Trajectory
The company has demonstrated robust revenue growth and significantly narrowing losses over the past three fiscal years, as detailed in its draft red herring prospectus (DRHP). Revenue from operations surged to Rs 7,114.85 crore in FY25 from Rs 2,914.28 crore in FY23, reflecting an impressive compound annual growth rate (CAGR) of 56.25%.
PhonePe's revenue mix has diversified beyond its core UPI payments. The contribution from merchant payments increased from 14.75% in FY23 to 30.78% by September 2025. Additionally, financial services, including lending and insurance distribution, expanded from 0.96% in FY23 to 11.55% in the first half of the current fiscal year. Together, merchant payments and financial services accounted for 42% of the company's revenue, underscoring growing monetisation across various verticals.
Improved Profitability and Cash Flow
Losses have narrowed substantially, with restated losses declining by more than Rs 1,060 crore between FY23 and FY25 to Rs 1,727.41 crore. Loss margins improved to (22.64)% from (90.68)% over the same period. The company achieved positive adjusted EBITDA in FY24 and FY25 and reported adjusted EBIT profitability in FY25. It also generated free cash flow of Rs 190.47 crore in FY25 and over Rs 250 crore in the six months ended September 30, 2024.
Company Background and User Base
Founded in 2016 and headquartered in India, PhonePe boasts over 65 crore registered users and a merchant network exceeding 4.7 crore as of September 30, 2025. Its services span a wide range, including consumer and merchant payments, lending and insurance distribution, and newer platforms such as Share Market and Indus Appstore.
