Uncertainty around merchant discount rate and volatile markets are clouding India’s ₹33,600-crore fintech IPO pipeline. Companies like PhonePe and Razorpay are now reassessing their listing timelines. Kunal Jhunjhunwala said, “Public market investors value predictability.” Many firms must now show stable profits and clear revenue models before they can finally go public.
Uncertainty around merchant discount rate (MDR) and volatile equity markets are adding to the challenges facing India’s fintech IPO pipeline, prompting companies and investors to reassess listing timelines and valuations as they prepare for public-market scrutiny.
India’s fintech sector has at least ₹30,600 crore, potentially exceeding ₹33,600 crore, of IPO capital lined up across companies that have disclosed or are reported to be preparing public offerings, according to data compiled by Tracxn using external research. The pipeline includes PhonePe, Razorpay, Navi, InCred Holdings, Fibe, InsuranceDekho and Upstox. KreditBee and PayU India are excluded because their plans are unconfirmed or on hold.
Valuation challenges
MDR uncertainty is adding another variable to the valuation exercise, particularly for payments companies with significant exposure to Unified Payments Interface (UPI) transactions.
“Public market investors value predictability. They want a clear view of how a company earns, what its margins look like over time, and how durable that profitability is. For payments companies, MDR sits at the centre of that view,” said Kunal Jhunjhunwala, founder of airpay.
He said companies preparing to list would need a few quarters of data under the new framework to demonstrate how merchant behaviour, revenue sharing and payments economics evolve before presenting investors with a credible long-term outlook.
However, MDR is not the only factor influencing listing decisions. Kushal Bhagia, founder and partner at All In Capital, said market volatility, global interest rate expectations, public-market performance and investor appetite for technology stocks would also determine IPO timing and pricing.
For payments companies, uncertainty over regulatory outcomes could lead investors to apply a higher risk discount, particularly where revenue models depend on transaction volumes without clear monetisation.
Delayed exits
The implications extend beyond listing timelines. Jhunjhunwala said delayed IPOs could stretch exit timelines for existing investors, while funding would increasingly favour companies with strong fundamentals and diversified revenue streams.
Bhagia added that delayed listings could slow the return and recycling of capital for funds nearing the end of their investment cycles, although strategic sales and other liquidity routes could provide alternatives.
Meanwhile, Fibe, operated by Social Worth Technologies, has received the Securities and Exchange Board of India’s final observations for a proposed ₹750-crore fresh issue, alongside an offer for sale of about 4.01 crore shares. The fresh capital is intended largely to strengthen its lending subsidiary’s capital base and support onward lending.
The pipeline remains substantial, but companies may have to balance their fundraising needs against valuation expectations and investors’ demand for clearer paths to sustainable profitability.