PhonePe Rolls Out The IPO Carpet

Ola Electric, Swiggy and now PhonePe. Another IPO from Bengaluru is all set to grab the limelight, as the fintech giant announced its plans this past week.

With no major movement in the stock market and listed new-age tech companies, PhonePe’s press announcement about its upcoming IPO was not only the biggest piece of news but also unusual because it came out of nowhere.

Of course, we knew that PhonePe was on course to hit the public markets for some time now, but the company had always maintained that it needed clarity on the UPI transaction share being the market leader in UPI payments.

But with the current fiscal year about to end, PhonePe felt confident enough to declare its IPO plans for the first time ever.

“I’d like to share the news that PhonePe, our fintech business, is making preparations for an IPO in India. Our PhonePe team has long aspired to be a public company and we are excited to be taking these early steps,” Walmart CEO Doug McMillon told analysts while discussing PhonePe’s results.

McMillon also told analysts that PhonePe hit $1.7 Tn in TPV at the end of January with close to 310 Mn daily transactions.

Not much is known about PhonePe’s IPO plans as of now, but by the time it lists, it could very well be the largest fintech company in India, considering Paytm’s growth challenges, which only adds to the hype around this listing.

PhonePe reported operating revenue of INR 5,064 Cr in FY24, up 74% from the previous fiscal. In comparison, Paytm reported income of INR 9,978 Cr in FY24, comfortably more than the two rivals combined. Paytm is well ahead when we look at the numbers as of March 2024.

But in the nine months since then (till December 2024) Paytm has fallen behind. Its FY25 annual revenue is on course to match PhonePe’s FY24 and the company has also fallen into losses.

Paytm’s revenue for Q1, Q2 and Q3 FY25 has been trending 35% lower on a YoY basis compared to these respective quarters in FY24. If this trend continues, Paytm could finish FY25 with around 30%-35% lower revenue than FY24, which would put its annual income in the ballpark of INR 5,300 Cr.

In fact, if PhonePe maintains the revenue growth rate seen in FY23 and FY24 — 77% and 74% respectively — it could well emerge as the leading fintech app in India by revenue by March 2025.

“PhonePe has two things going in its favour in the run up to the IPO. Unlike Paytm where the leadership board was restructured several times before and after listing, PhonePe has had a stable board and its leadership. Secondly they have smartly avoided the regulatory axe until now by not going aggressive on lending or other businesses and increased their dominance in UPI,” a fintech unicorn CXO turned investor told us.

PhonePe has also likely made a meaningful improvement in its profitability since FY24, and as such will feel confident about seeking a high valuation at the IPO as well. In its last round in 2023, the company had raised funds at a valuation of $12 Bn, and since then its revenue has likely more than doubled.

We’ll know more as the company looks to file its pre-IPO papers in the coming weeks, but PhonePe is already looking like the biggest startup IPO of the year

Gainers & Losers

Amid a mixed week for new-age tech stocks, DroneAcharya saw the greatest selling pressure from its investors this past week. Meanwhile, TAC Infosec was the biggest gainer this week, hitting upper circuit at the end of the week on the back of robust topline growth.

Stock In Focus: TAC Infosec Soars

Cybersecurity firm TAC Infosec was the biggest gainer this week, gaining about 10% since Monday open on the back of the company’s growth projections for the second half of the fiscal year FY25.

In an investor presentation released this week, the cybersecurity firm said that it is now operational in countries like China, UK, The US, among others and is serving clients like Microsoft, Freshworks, Nissan.

It also projected robust returns on its acquisitions of CyberSandia US and TAC CSC, Dubai. While CyberSandia acquisition will allow TAC to access the US government business through its already won contract that only “open for bids once every four years, its Dubai acquisition will help it target local enterprises and government entities based in the UAE.

Brokerage Corner: Thumbs Up For FirstCry

After touching a fresh low of INR 374.40 on February 19, the shares of kidswear brand FirstCry revived a bit to end the week at INR 404.30. The revival came on the back of the renewed optimism that brokerage firm JM Financial showed for the company’s shares  on February 20, giving them a ‘Buy’ rating along with a price target of INR 605.

The brokerage noted that the downturn for the company’s shares come at the behest of its pre-IPO lock-in expiring recently, resulting in potential buyers holding off while potential sellers liquidated their positions before the event.

“With over a week since lock-in expired on Feb 10, 2025, we note that neither have the volumes spiked nor have we seen any block deals, denoting pre-IPO investors’ willingness to hold on to their positions until better value is on offer,” the brokerage said in its report on February 20.

Markets Roundup: IPO Watch & Top Stories

• Licious’ $2 Bn IPO: The online meat delivery startup is eyeing a public listing next year after attaining profitability. The startup is planning for an IPO that values it at $2 Bn, a 33% jump from its last private valuation of $1.5 Bn.
• Lenskart To File Papers Soon: Shortly after roping in bankers like Kotak Mahindra Bank and Morgan Stanley for its much awaited IPO, Lenskart is now eyeing to file its DRHP by May. The startup is eyeing a valuation of $10 Bn for the offer, which is double its last private valuation.
• Navi Preps For IPO: Eyeing a public listing in the second half of FY26 like PhonePe, Sachin Bansal’s fintech startup Navi has initiated discussions with merchant bankers to finalise the valuation, timeline for the offering.
• boAt’s Second IPO Bid: About three years after dropping its IPO ambitions, boat is now looking to file for an IPO to raise INR 2,000 Cr in FY26. It is planning to file its DRHP for the IPO soon and is likely to take the confidential filing route.