In recent weeks, Indian startup PhonePe has been buoyed by its $650 million raised in a Series E round of funding. The company has now bulked up its war chest following the separation from Flipkart, which it announced earlier this year. With this new capital and the possibility of further acquisitions on the horizon, PhonePe is primed to continue growing at an aggressive pace and become one of India’s dominant digital-payments options.
With valuations in the billions, it’s clear that PhonePe is one of the most valuable startups out there. Many experts believe that this company has growth potential that is far beyond what its current valuation suggests. This investment by Walmart will no doubt help to fuel this growth even further.
The partnership between Walmart and PhonePe will provide financial services to Indians at scale, raising the awareness of the benefits of banking among this population. This partnership will also help to increase the adoption of digital payment methods in India, which is essential for both economic growth and social development.
The competition among India’s top fintech companies is heating up as they all try to expand their reach beyond the traditionalwallet and bill payment services. PhonePe, valued at $12 billion, is India’s most valuable startup, though it is also facing stiff competition from Google Pay and Paytm. Both of these companies are expected to achieve revenue exceeding $1 billion by March this year.
While PhonePe is the clear leader in the mobile payments market on UPI, it’s not the only company competing for customers. There are other startups like Swiggy and Zomato that offer similar services, and some analysts believe that Paytm could eventually emerge as a serious challenger to PhonePe.
The separation of Flipkart and PhonePe is a positive for both companies. PhonePe, which is owned by Walmart, has been on pace to process transactions worth $1 trillion on an annualized basis. This demonstrates the strength of their partnership and the potential that they have for continued growth. Flipkart will be able to focus on its strategic goals while also benefiting from Walmart’s resources.
A recent extension to the deadline until 2025 has paved the way for PhonePe to continue its fast growth in India. With 80% of all UPI transactions processed through Google’s GPay and PhonePe, the startup remains a strong player in the Indian market. The regulator, however, remains a concern for growth; if it chooses to enforce stricter guidelines, PhonePe could face some difficulty scaling its operations.
Given that PhonePe has a large user base, leveraging it could provide a distribution engine for other businesses. This could include crossing-selling products such as insurance, wealth management, lending and stockbroking. This would help the startup expand its reach and enlarge its customer base.
It is evident that PhonePe has a lofty valuation because they aim to become a bank. In addition, their impressive revenue and growing user base suggest that they may be on track to achieve this goal.
Indian ecommerce giant PhonePe forecasts stellar growth over the next two years, reaching a revenue of $325 million in 2022, and $504 million by 2023. This phenomenal increase in revenue is largely due to the company’s continued expansion into new markets, as well as renewing its existing customer base with attractive new offers and services. With such positive momentum heading into the future, PhonePe is likely to remain among India’s leading ecommerce companies for years to come.
PhonePe is a relatively young company, having only been operational for four years. While the startup does not currently expect to turn its EBIDTA positive until calendar year 2025, it has put into place various measures to boost profitability in the meantime. These include increasing acquisition and marketing expenditures, as well as instituting data charges that are higher than those of its rivals. While these measures may not prove to be profitable immediately, they could eventually payoff if PhonePe can cement a leadership position in India’s digital payments market.
The PhonePe co-founder and CEO, Sameer Nigam, thanked Walmart, their majority investor, for their continued support of the company’s long-term aspirations. PhonePe is excited about the next phase of its growth as it builds new offerings for Indian consumers and merchants, along with enabling financial inclusion across the nation. With Walmart’s backing and support, PhonePe looks to continue its rapid growth in India and beyond.
