PhonePe Files for $1.5B IPO at a $15B Valuation: A New Era for India’s Fintech Investing?
On 24 September 2025 PhonePe Limited filed a Draft Red Herring Prospectus (DRHP) with SEBI via the confidential route, signalling intent to list in India (likely in early 2026). The company is targeting to raise approximately $1.2–1.5 billion (₹10,000–12,000 crore) through a mix of fresh issuance and an offer-for-sale (OFS), with a headline target valuation of roughly $15 billion (≈₹1.33 lakh crore). Lead managers reported in media leaks include Kotak Mahindra Capital, JPMorgan, Citi and Morgan Stanley.
Key operating and financial metrics disclosed (FY ended Mar 31, 2025)
PhonePe’s DRHP and reporting around the filing highlight a clear improvement in underlying economics for the year ended 31 March 2025: revenue from operations rose about 40% year-on-year to ₹7,115 crore, up from prior year levels; losses narrowed to ₹172 crore (₹17.2 billion) in FY2025 from ₹199.6 crore (₹19.96 billion) a year earlier; and the company reported positive adjusted EBIT of ₹117 crore (excluding ESOP costs) and positive free cash flow of ~₹1,202 crore from operations, per media disclosures. PhonePe also claims major scale: >600 million registered users and roughly 40 million merchants on its platform. These improvements form the operational justification for an IPO now.
Investor-relevant metrics
Because PhonePe is a high-growth fintech converting scale into monetisation, traditional equity ratios like P/E are not currently meaningful; instead investors should focus on growth, margin and balance-sheet ratios that will determine long-term valuation:
* Revenue growth (YoY): ~+40% (FY2025 vs FY2024).
* Adjusted EBIT: ₹117 crore (first positive adjusted EBIT, FY2025).
* Reported net loss: ₹172 crore (FY2025).
* Free cash flow from operations: ~₹1,202 crore (FY2025).
* Loss-to-revenue ratio: loss of ₹172 crore on revenue ₹7,115 crore → net loss margin ~2.4% (FY2025).
* OFS dilution indicated: market reports suggest ~10% stake being sold by existing investors in the offering (subject to prospectus confirmation).
* GTV/ payments share: PhonePe claims a dominant UPI footprint (market share estimates vary regionally); GTV metrics and take-rates will be central once DRHP is public.
These figures imply PhonePe has moved from subsidy-led growth toward cash generation; key ratios investors should compute from the prospectus will be adjusted EBIT margin, operating cash conversion (OCF / EBITDA), net debt/EBITDA (if any).
Valuation context and comparable signals
A $15 billion target valuation places PhonePe among the largest private-to-public Indian tech listings. For investors, the implied revenue multiple (EV / revenue) will matter: at $15B valuation and FY2025 revenue ₹7,115 crore (~$802M at ₹88.7/USD), the implied EV / FY2025 revenue is ~18–19x (back-of-envelope), before accounting for growth and margin improvement. By comparison, high-growth fintech peers globally trade broadly between mid-teens to 30x revenues depending on profitability trajectory, so PhonePe’s multiple will be judged on sustainability of its improving margins and FCF. Reuters and ET noted the valuation and valuation context in coverage.
Risks investors must consider
Regulatory changes (UPI rules, market-share caps), execution risk in scaling financial services beyond payments, and concentrated investor exits via OFS are immediate risks. Macro volatility or a chilled IPO window could force price discovery away from the target $15B. The confidential filing does not guarantee a proposed size or timeline; investors should read the public DRHP once available for precise governance, related-party and contingent liability disclosures.
What investors should do now
1. Wait for the public DRHP for full numbers (detailed unit economics, take-rate, segment revenue split, capex plan, and shareholding/lock-ups).
2. Assess cash generation metrics, particularly adjusted EBIT margin, OCF/EBITDA, and free cash flow trends; these are the clearest signals PhonePe is past pure-subsidy phase.
3. Model multiple scenarios (base: gradual margin expansion and 25–35% revenue CAGR; bull: faster margin recovery and >$2B revenue by FY2027; bear: slower monetisation and regulatory headwinds).
4. Position with sizing discipline. If subscribing, treat the IPO as growth exposure—limit position sizes until 3–6 months of post-listing performance and S-1/DRHP confirmations.
5. Consider secondary plays. Banks, payment-processor partners, and listed insurers/NBFCs that tie into PhonePe’s financial stack may benefit indirectly—evaluate those names on P/E, P/B and ROE relative to historical ranges.
Conclusion
PhonePe’s confidential DRHP filing on 24 Sep 2025 for a $1.2–1.5B raise at a $15B valuation is a major milestone for India’s fintech ecosystem. The company’s move toward reported positive adjusted EBIT and free cash flow materially changes the investment narrative, but investors should insist on prospectus-level details (unit economics, dilution, lock-ups, and regulatory risk) before making allocation decisions.
The image added is for representation purposes only
