PhonePe Bets on Infrastructure to Back Its Public Market Pitch

As PhonePe prepares for its stock market debut after getting regulatory approval, its updated draft prospectus highlights the fintech start-up’s long-term infrastructure strategy. This signals a shift in India’s fintech sector from rapid scaling to building durable competitive moats. 

Since 2016, the fintech player has invested ₹33.73 billion in proprietary, on-premises infrastructure, according to the filing. It has developed a four-layer technology stack, which includes more than one million compute cores and nearly 30.95 petabytes of storage capacity. 

While some market observers have raised concerns that such capital expenditure could weigh on near-term profitability, PhonePe has positioned its infrastructure ownership as a structural advantage rather than a cost burden. 

Currently, the company reports a server cost of approximately ₹0.06 per transaction. It suggests that economies of scale are already lowering unit costs as volumes grow. 

The company argues that reliance on third-party cloud and infrastructure providers becomes less economical at hyperscale, particularly for businesses with predictable and consistently high transaction loads such as payments. 

Even a Redseer report also mentioned that the fintech companies will survice only if they can build and control their compete technology stack.

PhonePe IPO

The fintech major has proposed a 100% book-built offer-for-sale (OFS) of up to 50.66 million (506,604,456) equity shares. Since this is a pure OFS, PhonePe will not receive any proceeds, all sale proceeds will go to the existing shareholders who are selling.

The shares being offered (face value ₹1 each) are being sold by the promoters and select investors and will represent a portion of the company’s post-offer paid-up equity; the exact percentage will be disclosed at pricing.

The UDRHP states that PhonePe has 50.66 million equity shares outstanding before the offer and that it has received in-principle listing approvals from both exchanges.

The filing names the selling shareholders and the book-running lead managers; the final price band, lot size and allotment mix will be announced closer to the bidding period.

In FY25, the company reported revenue from operations of ₹71,148.585 million and total income of ₹76,313.825 million. During the year, adjusted EBITDA stood at ₹14,771.926 million, translating into an adjusted EBITDA margin of about 20.76%. However, on a restated basis, PhonePe continued to report a net loss of ₹17,274.10 million.

It also includes adjusted profit or loss figures and platform-level EBITDA break-ups, which the management uses to demonstrate improving underlying business economics despite continued GAAP losses. At the same time, the UDRHP cautions investors that the six-month financials ended September 30, 2025 should not be treated as indicative of full-year performance.