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PhonePe’s $15 Billion IPO Tightrope: Payments Giant Grapples with Revenue Reliance

Updated: May 19, 2025 09:43

Image Source: The Entrepreneur Story
As PhonePe races toward its much-anticipated IPO, the Walmart-backed fintech titan faces a critical challenge: over 95% of its ₹5,064 crore FY24 revenue still stems from payments, despite aggressive pushes into insurance, lending, and wealth management. With its public listing looming, this reliance on its core business raises questions about valuation and long-term growth prospects in a competitive market.
 
Key Highlights:
  • Revenue Reality Check: PhonePe’s financial services vertical contributed just ₹207.4 crore (4%) to FY24 revenue, despite ₹800 crore invested in non-payment ventures. Insurance emerged as the lone bright spot, surging 250% to ₹114 crore, while lending remains nascent.
  • IPO Valuation Jitters: Analysts note parallels with Paytm’s $6.5 billion market cap, far below its peak valuation. PhonePe’s $12 billion private valuation hinges on convincing investors of its ability to monetize beyond UPI, where it commands 48% market share.
  • Regulatory Sword of Damocles: The NPCI’s proposed 30% UPI market cap looms large. CEO Sameer Nigam has warned that enforced limits could disrupt IPO pricing, as investors weigh growth constraints.
  • Strategic Shifts: The company transitioned to a public entity in April 2025, enlisting JP Morgan, Citi, and Morgan Stanley as advisors for its $15 billion listing bid. Recent FY24 results spotlight a 74% revenue jump and adjusted PAT of ₹197 crore, signaling improved financial health.
  • Cautious Diversification: Unlike rivals pushing risky credit products, PhonePe prioritizes insurance and low-risk offerings, avoiding bad debt but slowing diversification. Its Indus AppStore and Pincode e-commerce ventures remain early-stage bets.
With UPI processing 31 crore daily transactions worth ₹145 lakh crore annually, PhonePe’s dominance is undisputed. Yet, as it navigates regulatory headwinds and investor skepticism, its IPO success may hinge on proving it can evolve beyond being India’s payments colossus.
 
Sources: The Economic Times, Moneycontrol, Fortune India

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