📊 Decoding Fintech IPOs: Part 2 (India Focus) 📊
In FY24 I had written about Fintech IPO’s. Some key learnings:
1️⃣ Almost all fintechs that IPO’d in the wave of 2015 - 2021, with the exception of Adyen, in FY24 were trading at rev multiples lower than what they IPO’d at.
2️⃣ On avg, fintechs that IPO’ed from 2015 -’21, took 8 years to IPO. Fintechs expected to IPO from ‘25 - ‘28, have already passed the 8 yr mark
❗But apart from Mobikwik & Paytm, (and Policybazaar), the “star” fintechs of India haven’t IPO’d yet.
💡🚀 Indian fintechs that have IPO’d.
✅ Paytm: IPO’d in ‘21, at a rev multiple of 55.6x. Now at ~7x
✅ Mobikwik: IPO’d in ‘24. Underwent several valuation cuts prior to IPO. Pre-IPO was at a rev x of 2.3x, which jumped to 5.3x post IPO. Even though mkt cap doubled from ~$256M to ~$569M post IPO, it is still well within the 2x - 5x range established by Paytm & Block in FY24
💡🚀 Expected to IPO in ‘25 - ‘28
1️⃣ PhonePe: Valued at ~$12B in ‘23, and FY24 rev is ~$756M. It’s at a rev multiple of ~17x. Paytm is at ~7x, but I’d actually say that PhonePe is not overvalued. A comparison can be drawn to Adyen, a global PA, which has mkt cap / rev of ~25x. PhonePe rev grew by ~74% from FY23 - 24, and if it grows ~40-50% YoY, it can easily IPO at a 10-15x valuation for a ~$15B valuation (and I say this conservatively.) It’s a market leader in UPI payments, controlling ~50% of the market
2️⃣ Groww: Currently valued at ~$2- 3B, with FY24 rev of ~$383M, a rev multiple of ~5-7.8x. FY24 profits were at ~$40M. It is looking to IPO at a $6-8B valuation in early FY26. Angel One, a public equivalent, is at a market cap of $2.7B, and annualized FY25 rev of $681M, which is a rev multiple of ~4x. Robinhood, is at a $42B mkt cap, with ~$2.5B in revenues; a ~16x rev multiple. Reportedly Zerodha is at ~$7B valuation, at ~$1B rev. Groww also has a UPI App, and has carved an “investment” niche for itself within UPI. It has an NBFC that had a loan book of $115M as of June ‘24. So a target $6-8B at IPO doesn’t seem implausible
3️⃣ Pinelabs: Valued at $5.8B, with ~$160M rev in FY24, a multiple ~36x. I’d say it’s overvalued. 1) Online has not scaled as much as offline, which is needed for faster global expansion & 2) Muted growth: its rev grew by 2.8% from '23 - 24, with increased losses. But what it does have going for it is that it has potential. It’s a PA, a PA-CB, AA (Setu), a consumer app (Fave), and a PPI (Qwikcilver). But if it can leverage this remains to be seen
❗IPO’s have a reverse flip angle: PhonePe completed its flip in Jan ‘23 at a cost of $1B in taxes, and Groww in ‘24, paying $160M, Pinelabs & Razorpay are in process: Rzp could pay ~$200M
The Indian fintech ecosystem is maturing, and the upcoming IPOs are a sign of that.
I’ve gone into this in more detail in the deep dive. You can check it out here: https://lnkd.in/g6-574K6
Note: Calculations and views are my own and not of my employer. Treat them as directional and not actuals