Walmart-backed fintech giant PhonePe has adjusted its target IPO valuation to a range of $9 billion to $10.5 billion.
This revised figure represents a significant “haircut” from the $12 billion valuation the company achieved during its $100 million funding round in 2023. Analysts suggest the move is a pragmatic response to a “cooled” fintech market and lingering investor questions regarding long-term monetization.
IPO Structure: A Massive Exit for Early Backers
The upcoming IPO, which is expected to conclude by April 2026, is structured entirely as an Offer-for-Sale (OFS), meaning the company will not issue any new shares or raise fresh primary capital.
- Walmart’s Exit: The retail giant plans to offload approximately 45.9 million shares, trimming its stake by about 12%.
- Complete Exits: Notable early investors Tiger Global and Microsoft Global Finance are reportedly planning to fully exit their holdings through this public issue.
- Total Offering: The sale is expected to mop up between $900 million and $1.05 billion (approx. ₹7,500 crore – ₹8,700 crore).
Why the Lower Valuation?
Despite PhonePe’s dominance in the UPI ecosystem, several factors have led to a more conservative valuation target:
| Factor | Impact on Valuation |
| Monetization Concerns | While transaction volumes are record-breaking, UPI remains a low-margin business due to zero-fee regulations. |
| Market Sentiment | Excitement for Indian fintech has stabilized following the high-profile valuation corrections of rivals like Paytm. |
| Slowing User Growth | Investors are shifting focus from “active user growth” to “upselling” financial services (lending, insurance). |
| Geopolitical Risk | The ongoing Middle East conflict has introduced volatility into global capital markets, leading to more cautious pricing. |
Financial Performance (FY25 Snapshot)
PhonePe’s IPO filings (DRHP) show a company that is rapidly growing its revenue while successfully narrowing its losses.
- Revenue Boom: Operating revenue surged to ₹7,115 crore in FY25, a 40% year-on-year increase.
- Loss Reduction: Restated losses narrowed to ₹1,727 crore, down from over ₹2,700 crore two years prior.
- Profitability Milestones: The company reported positive adjusted EBITDA and became free cash flow positive in FY25, generating over ₹1,200 crore in operating cash flow.
- Diversification: Revenue from non-payment sources (Insurance and Lending) grew from less than 1% in FY23 to over 11% in the first half of the current fiscal year.
Market Context
If successful at the $10.5 billion mark, PhonePe will become the second-largest fintech IPO in Indian history, trailing only Paytm’s $20 billion debut in 2021. For comparison, Paytm currently trades at a market capitalization of approximately $7.1 billion.
