PhonePe IPO: how the business works

PhonePe earns fees on payments made in its app and on loans and insurance it sells for others; its costs are larger than that income, so it makes a loss.

• 01In FY25, 63.3% of revenue came from consumer payments, 28.0% from merchant payments and 7.8% from distributing loans and insurance.
• 02Of every ₹100 that came in during FY25, ₹53.7 went on staff pay (₹30.9 of it share-based pay) and ₹22.1 on fees to banks for processing payments.

Offer for sale (existing shares)

5.07 crore shares

To list on

NSE and BSE

• 01No fresh issue: PhonePe creates no new shares, so its share count stays at 50.66 crore shares of ₹1 face value each.
• 02Offer for sale: Walmart's WM Digital Commerce Holdings sells up to 4,59,42,496 shares, Microsoft up to 36,78,790 and Tiger Global up to 10,39,160. The money goes to them, not to PhonePe.
• 03Microsoft (0.71%) and Tiger Global (0.20%) are selling all their PhonePe shares. Walmart's unit is selling 12.37% of its own holding (Cityfort arithmetic from the UDRHP-I share counts).
• 04The shares on offer equal 10.00% of PhonePe's shares. PhonePe says the aim is the benefits of listing, which it expects to "enhance our visibility and brand image".
• 05PhonePe does not meet SEBI's profit test for IPOs, so it uses the other route (Regulation 6(2)): at least 75% of the shares go to large institutions, up to 15% to non-institutional investors and up to 10% to retail investors.

What a DRHP, RHP and prospectus are, and fresh issue vs offer for sale

Lead managers

Kotak Mahindra Capital Company, J.P. Morgan India, Citigroup Global Markets India, Morgan Stanley India Company, Axis Capital, Goldman Sachs (India) Securities, Jefferies India, JM Financial

Registrar

KFin Technologies Limited

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

• PhonePe app (consumer payments)

  A free app to send money by UPI, pay bills and recharge phones. 61.84 crore people had registered by March 2025.

• Merchant payments

  QR codes, smart speakers, a payment gateway for online businesses and the PhonePe Business app. 4.49 crore merchants had registered by March 2025.

• Loans and insurance distribution

  Loans from 56 lending partners and policies from 29 insurers, sold in the app. ₹14,270 crore of loans had been disbursed and 1.85 crore policies sold by 30 Sep 2025.

• Share.Market and mutual funds

  A stock-broking app with 12.6 lakh demat accounts, and mutual fund distribution with ₹5,838 crore of investors' money, at 30 Sep 2025.

• Indus Appstore

  An Android app store, launched in February 2024.

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

• Consumer payments

  63%

  of revenue

  Revenue linked to payments people make in the PhonePe app. It was 82.9% of revenue in FY23 and 56.1% in the six months to 30 Sep 2025.

• Merchants (shops and online businesses)

  28%

  of revenue

  Payment services and devices for businesses, plus incentives, mostly under an RBI scheme for payment devices (₹198 crore in FY25).

• Lenders and insurers

  8%

  of revenue

  Fees for loans and insurance policies sold through PhonePe. Merchant loans alone earned ₹328 crore in FY25, up from ₹0.2 crore in FY23.

• Other services

  1%

  of revenue

  Share.Market stock broking, mutual fund distribution and the Indus Appstore marketplace.

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

1. 1Payments, merchant services, loans and insurance brought in ₹7,115 crore of revenue in FY25, plus ₹517 crore of other income.
2. 2PhonePe paid banks ₹1,688 crore to process payments.
3. 3Staff cost ₹4,097 crore: ₹1,739 crore of salaries and other pay, and ₹2,358 crore of share-based pay (₹593 crore of it in cash-settled awards).
4. 4Ads, IT, other running costs and depreciation took another ₹3,571 crore.
5. 5Costs were larger than income, so PhonePe made a net loss of ₹1,727 crore.

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

Each line = amount ÷ total money in × 100. Lines may not add to exactly ₹100 because of rounding.

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

• UPI sponsor banks

  UPI apps work through partner banks. PhonePe uses three: Yes Bank, Axis Bank and ICICI Bank, on contracts that can end on 90 to 180 days' notice.

• Licences and regulators' rules

  PhonePe's businesses answer to RBI, SEBI, IRDAI (insurance), UIDAI and the telecom department, and to NPCI, which runs UPI.

• Its own computer systems

  It has spent ₹3,373 crore on servers, routers and switches since 2016, and handled up to 22,369 transactions a second in H1 FY26.

• People on the ground

  12,338 full-time employees and 19,356 contract staff at 30 Sep 2025; a field sales team of 25,657 signs up shops in 96.96% of India's pin codes.

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

• Google Pay

  Named in the UDRHP-I as a rival in consumer payments.

• One 97 Communications (Paytm)

  Consumer payments rival. The industry report commissioned by PhonePe from Redseer calls it the only listed player comparable in size and business model.

• Razorpay

  Named in the UDRHP-I as a rival in merchant and business payments, with BillDesk, PayU, Pine Labs and BharatPe.

• PB Fintech

  Named in the UDRHP-I as a rival in selling financial products, with Cred and Navi.

• super.money

  A payments and lending app run by Scapic Innovations, a Walmart-group company; the UDRHP-I lists it as a rival.

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

• Merchant payments

  Working

  ₹430 crore (FY23) → ₹1,991 crore (FY25)

  Merchant payments rose from 14.7% of revenue in FY23 to 30.8% in the six months to 30 Sep 2025.

  Status: Working, on track against what the company said.

• Loans and insurance distribution

  Working

  Merchant loans disbursed: ₹11 crore (FY23) → ₹4,507 crore (FY25)

  This line rose from 1.0% of revenue in FY23 to 11.6% in the six months to 30 Sep 2025.

  Status: Working, on track against what the company said.

• New platforms (Share.Market, Indus Appstore)

  Early

  Other services: ₹57.3 crore, 0.8% of FY25 revenue

  Share.Market had 12.6 lakh demat accounts at 30 Sep 2025, 37.48% of them opened through the PhonePe app.

  Status: Early, too early to judge.

Status compares progress with what the company itself said it would do: Working = on track against what the company said; Mixed = partly on track; Behind = behind the company's own plan; New = recently announced; Early = too early to judge.

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

EBITDA = profit before interest, tax and wear-and-tear of assets. Financial year runs April to March (March year end). Net profit is the share belonging to the company's owners.

• ₹5,549 crore of that cash was received in Sep 2025 to pay employees' tax on share awards and was paid out in Oct 2025. Without it, bank balances and investments were about ₹6,611 crore (Cityfort arithmetic).
• Lease liabilities were ₹716 crore on 30 Sep 2025; they are not counted as borrowings here.
• Unused bank credit lines were ₹2,200 crore on 30 Nov 2025; ₹170 crore of bank guarantees and letters of credit were outstanding.
• Losses built up over the years were ₹16,305 crore on 30 Sep 2025, against ₹24,798 crore that shareholders paid in above the face value of their shares.
• Net worth uses SEBI's definition in the UDRHP-I. The UDRHP-I reports no contingent liabilities on 30 Sep 2025.

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

The promoter group's share falls after the IPO when new shares are added or promoters sell. The offer document shows the expected holding after the offer.

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

• Sameer Nigam

  Co-founder, Whole-time Director and CEO · since 2016

  Director since 26 Apr 2016. Paid ₹2.6 crore in FY25, excluding share awards.

• Rahul Chari

  Co-founder, Whole-time Director and CTO · since 2016

  Director since 26 Apr 2016. Paid ₹2.6 crore in FY25, excluding share awards.

• Burzin Engineer

  Co-founder, Chief Reliability Officer

• Rohit Bhagat

  Chairperson, independent director · since 2023

  The board has 4 independent directors (including the chair), 4 Walmart nominees and the 2 executive co-founders. Walmart nominee Rachel Lee Brand resigned with effect from 27 May 2026.

• Adarsh Nahata

  Chief Financial Officer

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026; Notice of resignation of Ms. Rachel Lee Brand as Non-Executive Nominee Director (Additional), effective 27 May 2026

Auditor

S.R. Batliboi & Associates LLP

Auditor changes

None in the period covered

Audit qualifications

FY23–FY25: The UDRHP-I says the auditor's reports for FY23 to FY25 carry remarks on where backup servers were kept and on the audit trail (edit log) not being enabled or kept in some software.; FY26: The transcript of the 24 Jul 2026 AGM says the FY26 auditors' reports had no qualification or adverse remark.

Related-party dealings

Revenue from Walmart and Flipkart group companies was ₹51.3 crore in FY25. Share-based pay to key managers was ₹919 crore in FY25 and ₹1,204 crore in the six months to 30 Sep 2025. The UDRHP-I says related-party deals were at arm's length.

Credit rating

No public credit rating found

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026; Transcript of the 14th Annual General Meeting held on 24 Jul 2026

• Walmart owns 71.77% of PhonePe (fully diluted) through WM Digital Commerce Holdings, which Wal-Mart International Holdings, the second promoter, owns fully.
• Flipkart bought PhonePe in 2015; the two were separated in 2022, when PhonePe also moved its home from Singapore to India.
• PhonePe has used Flipkart Internet for data-centre servers and for HR, security and finance services under agreements signed in 2017.
• Revenue from Walmart and Flipkart group companies was ₹51.3 crore in FY25, 0.7% of revenue.
• Until listing, a shareholders' agreement lets Walmart nominate 4 directors while it holds at least 50%; the agreement ends when the shares list.

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

Cases are listed as the offer document describes them. A pending case is an allegation until a court or regulator decides it.

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

• Execution

  Losses every year shown

  PhonePe lost ₹1,727 crore in FY25 and ₹1,444 crore in the six months to 30 Sep 2025. Cash from operations was negative in FY23, FY24 and H1 FY26.

  Watch The net loss and cash from operations in the next offer document.

• Regulation

  Two revenue lines stopped in 2025

  Real-money gaming payments ended on 22 Aug 2025 under the Online Gaming Act, and rent payments ended in Sep 2025 after an RBI direction. Together they brought in ₹1,507 crore of FY25 revenue (₹245 crore + ₹1,262 crore).

  Watch Revenue for periods from Oct 2025, which the UDRHP-I says will show the effect.

• Regulation

  NPCI's planned 30% cap on UPI volume

  NPCI plans to cap any app at 30% of UPI volume, with a deadline of 31 Dec 2026. PhonePe had 46.85% in Sep 2025 (NPCI data in the industry report commissioned by PhonePe from Redseer).

  Watch Any NPCI circular on the cap or a new deadline.

• Concentration

  Most revenue still comes from payments

  Payment services were 86.92% of revenue in the six months to 30 Sep 2025, and consumer payments alone 56.14%.

  Watch The share of revenue from loans, insurance and other services.

• Pricing

  Bank processing fees

  Fees paid to banks for processing payments rose from ₹22.9 per ₹100 of revenue in FY23 to ₹27.8 in H1 FY26. The UDRHP-I says PhonePe may not be able to pass increases on.

  Watch Payment processing charges as a share of revenue.

• Concentration

  Reliance on three sponsor banks

  UPI payments run through Yes Bank, Axis Bank and ICICI Bank, on contracts that can end on 90 to 180 days' notice. The UDRHP-I says NPCI flagged device-binding failures on the Android app in Nov 2024.

  Watch Changes in PhonePe's sponsor-bank list or NPCI actions.

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

• PhonePe gets none of the money

  The whole offer is existing shareholders selling. The money goes to Walmart's WM Digital, Microsoft and Tiger Global; PhonePe's own cash does not change.

• Walmart stays in control

  The UDRHP-I says WM Digital will keep majority control after the offer. If all offered shares are sold and no other shares are issued, it would hold 64.27% (Cityfort arithmetic; the UDRHP-I leaves the post-offer figure blank).

• Offered under the route for loss-making companies

  PhonePe does not meet SEBI's profit test, so at least 75% of the shares must go to large institutions and retail investors can get at most 10%.

• Market figures come from a report PhonePe paid for

  Market sizes and shares in the UDRHP-I come from an industry report commissioned and paid for by PhonePe from Redseer, dated 13 Jan 2026. The UDRHP-I lists this as a risk factor.

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

What does PhonePe do?

PhonePe runs the PhonePe app for UPI payments, bill payments and recharges, gives shops QR codes, smart speakers and a payment gateway, and distributes loans, insurance and mutual funds, according to its UDRHP-I dated 21 Jan 2026.

How does PhonePe make money?

PhonePe earned 63.3% of its FY25 revenue of ₹7,115 crore from consumer payments, 28.0% from merchant payments and 7.8% from distributing loans and insurance, according to restated accounts in its UDRHP-I.

Who are PhonePe's customers?

PhonePe had 29.03 crore monthly active users and 1.13 crore monthly active merchants in March 2025, according to its UDRHP-I; it also earns fees from 56 lending partners and 29 insurers whose products it sells (30 Sep 2025).

How big is PhonePe?

PhonePe reported revenue of ₹7,115 crore and a net loss of ₹1,727 crore in FY25 (restated, consolidated, UDRHP-I). In the six months to 30 Sep 2025, revenue was ₹3,918 crore and the net loss ₹1,444 crore.

How many payments go through PhonePe?

PhonePe's users made 90.27 billion transactions worth ₹132.70 trillion through the PhonePe app in FY25, up from 39.67 billion worth ₹69.55 trillion in FY23, according to its UDRHP-I.

Who owns PhonePe before the IPO?

Before the IPO, Walmart owned 71.77% of PhonePe (fully diluted) through WM Digital Commerce Holdings, according to the UDRHP-I dated 21 Jan 2026; General Atlantic held 8.98% and co-founders Sameer Nigam and Rahul Chari 2.55% each.

What is the PhonePe IPO?

The PhonePe IPO, per its UDRHP-I dated 21 Jan 2026, is an offer for sale of up to 5.07 crore existing shares by Walmart's WM Digital, Microsoft and Tiger Global, with no fresh issue, so PhonePe receives no money; the shares are to list on NSE and BSE.

Does PhonePe have debt?

PhonePe had no borrowings on 30 Sep 2025, according to its UDRHP-I. It held ₹12,160 crore in bank balances and investments, including ₹5,549 crore received to pay employees' tax on share awards, which was paid out in Oct 2025.

Source: PhonePe Limited Updated Draft Red Herring Prospectus - I (UDRHP-I), dated 21 Jan 2026

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