A mismatch in valuation may have delayed PhonePe’s IPO plans

Walmart-owned PhonePe is deferring its Initial Public Offering (IPO) citing market volatility and the West Asia war. However, sources suggest that a mismatch in valuation expectations, apart from market volatility arising from the Israel-Iran war, may have led the payments major to defer its India listing.

“We paused the process only because of the current market conditions, which are unrelated to PhonePe. Any allusions to the pause being related to PhonePe-specific issues, such as valuation, are baseless,” PhonePe said in an official statement to a leading daily.

PhonePe received Sebi approval for its IPO on January 20 and has until May 2027 to complete the listing. PhonePe’s main rival Paytm is currently valued at around $7.5 billion, while both companies have similar revenue.

Several analyst reports published since the company’s draft red herring prospectus (DRHP) have pointed out that Paytm is ahead of PhonePe in its monetisation journey.

“Paytm is ahead in its monetisation journey with a more diversified business mix, and better margins,” a BofA Securities report published earlier this month said.

Several research reports from analysts compared PhonePe's dependence on payments for around 85 percent of its topline.

However, PhonePe continues to hold sway with its customers, even as UPI continues to see new entrants with deep pockets. The continued growth of the UPI platform, along with newer use cases and strong innovation, makes UPI an unrivalled platform for digital payments in the country.

“In consumer lending, we see room for PhonePe to emerge as one of the dominant platforms in the space, given its access to data and reach of 30 crore active users,” the BofA report said.