Walmart-backed PhonePe eyes $10.5b valuation in India IPO

Walmart-backed Indian fintech PhonePe is targeting a US$9 billion to US$10.5 billion valuation in its planned India IPO.

This implies the IPO could raise up to US$1.1 billion, a decrease from its US$12 billion private valuation in 2023. According to the filing, Walmart will trim its stake by 12%, while Tiger Global and Microsoft plan to sell their entire holdings.

PhonePe aims to complete the listing by April. While the firm processes nearly half of India’s UPI transactions, payments remain a low-margin business.

Financial data showed losses widened to 14.4 billion rupees (US$156.03 million) for the six months ended September 30, despite a 22% revenue jump. Portfolio managers noted that cooling investor enthusiasm and concerns over monetizing its 650 million users contributed to the lower valuation target.

🔗 Source: The Economic Times

🧠 Food for thought

Implications, context, and why it matters.

The IPO filing’s losses sit alongside adjusted profit figures

Losses over a six-month stretch can overshadow a separate metric in the company’s own disclosures.
For the fiscal year ending March 2024, PhonePe Group reported adjusted profit after tax (PAT) of INR 197 crore after excluding employee stock option plan (ESOP) costs. It reported an adjusted loss of INR 738 crore the prior year 1.
PhonePe’s standalone payments business drove that change. It posted adjusted PAT of INR 710 crore for FY23-24, which suggests improving unit economics on an adjusted basis 1.
The shift fits a plan to rely less on user acquisition and earn more from its user base through merchant services, lending, and insurance distribution 2, 3.

A lower valuation target adds pressure on UPI-led models

The lower IPO valuation target may signal that investors want clearer monetisation and profitability. This remains an interpretation rather than a stated company rationale.
Public markets are weighing the “scale without pricing power” pattern in Unified Payments Interface (UPI) payments, where high transaction volume may not deliver strong margins 4.
Other highly valued private startups may face tougher tests when public-market expectations focus on profit and varied revenue, rather than user metrics 5.
The IPO outcome may depend on whether PhonePe can position itself as more than a payments utility. It aims to cross-sell higher-margin products like loans and insurance, often through distribution businesses 3.