Razorpay moves closer to public market debut as Sebi gives green signal to IPO

Fintech major Razorpay Software Ltd has moved a step closer to its stock market debut after receiving approval from the Securities and Exchange Board of India (Sebi) for its initial public offering (IPO), according to an update on the regulator's website.The market regulator issued its final observations on Razorpay's draft offer documents on November 3, clearing the way for the company to proceed with the next stages of its listing process. Renewable energy independent power producer Sembcorp Green Infra also received Sebi's approval, on November 13, the update showed.Razorpay had confidentially filed its draft red herring prospectus (DRHP) with Sebi in June. The confidential filing route allows companies to obtain regulatory feedback without immediately making their financial statements and other sensitive business information public.The Bengaluru-based company is working towards a listing in the first quarter of 2027, ET had reported earlier this month. However, the timeline could be pushed back depending on market conditions and investor appetite. The final IPO launch date and pricing will be determined by demand from institutional and retail investors, as well as broader equity market sentiment.ET had reported on April 20 that Razorpay was preparing a confidential IPO filing to raise Rs 5,500-6,500 crore at an expected valuation of around $5 billion, or Rs 49,000-50,000 crore. This would be below the $7.5 billion valuation the company commanded in its last major private funding round in 2021.Subsequently, the fintech has also attracted investor interest at a lower valuation of around $3 billion, or Rs 30,000 crore, reflecting the more cautious approach investors have adopted towards valuations of technology companies ahead of their public listings.Razorpay's shareholders have approved a fresh issue of shares worth Rs 2,700 crore, alongside an offer for sale (OFS) through which existing investors can partially pare their holdings. Axis Capital, JPMorgan, Citi and Kotak Mahindra Capital are advising the company on the proposed IPO.The Sebi approval comes at a time when public market investors are increasingly scrutinising the growth, profitability and valuations of India's new-age technology companies. Walmart-backed payments rival PhonePe had paused its IPO plans earlier this year amid market uncertainty, highlighting the importance of timing for fintech companies looking to tap public markets.ALSO READ: Razorpay gets Sebi nod for Rs 5,000-6,000 crore IPO: sourcesFounded in 2014 by Harshil Mathur and Shashank Kumar, Razorpay provides businesses with online and offline payment acceptance solutions, cross-border payments and a range of financial services. Its investors include Peak XV Partners, Lightspeed Venture Partners, Tiger Global, Y Combinator and GIC.The company reported a 65% year-on-year increase in consolidated revenue to Rs 3,783 crore in FY25, compared with Rs 2,296 crore in the previous financial year. However, it posted a consolidated net loss of Rs 1,209 crore, largely due to expenses related to employee stock options, restructuring and tax costs associated with shifting its domicile to India."FY25 was a pivotal year for Razorpay. We delivered top-line growth through strong execution, while simultaneously improving our gross margins," cofounder and chief executive Harshil Mathur had said while announcing the company's financial results.Ahead of its proposed listing, Razorpay has also recalibrated its offline payments business, shifting its focus towards merchants that require an integrated online and offline payments offering. The move is aimed at improving operating efficiency and profitability as the company prepares to face public market scrutiny.The company completed its reverse flip, moving its domicile from the US to India in May 2025, removing a key structural hurdle ahead of a domestic listing.More recently, it received a final payment service provider licence to operate from Gujarat International Finance Tec-City (GIFT City). The licence is expected to expand its ability to facilitate foreign-currency transactions and cross-border fund flows.Disclosure: This article has been written by Kumar Gaurav, who is not a Sebi-registered Research Analyst or an Investment Adviser. Gaurav and their ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective Sebi-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here