MDR And AI: Inside The Two Acronyms That Could Shape Razorpay’s ₹6,000 Cr IPO
In March this year, on the sidelines of Razorpay’s annual flagship event FTX, CEO Harshil Mathur told Inc42 that what…
Eight months after Razorpay went public, the company is now preparing for the final leg of its IPO journey, with SEBI having approved the proposed IPO. The fintech major aims to raise ₹5,000-6,000 Cr through a mix of fresh issue and offer for sale at a valuation of approximately $5 Bn. The listing is expected between January and March 2027, with major banks such as Axis Capital, Kotak Mahindra Capital, JP Morgan, and Citi acting as the reported bankers.
Razorpay's valuation has seen a significant decrease from the $7.5 Bn valuation in December 2021, even though fintech valuations were sky-high due to a pandemic-led funding boom. PhonePe, another fintech major, paused its mega listing in March 2026, citing valuation concerns and volatile geopolitical tensions, but later revived its plans at a target valuation of $10 Bn.
CEO Harshil Mathur emphasized the importance of Razorpay's performance in the public markets, rather than just being a publicly listed company. The company has shown profitability throughout 2025, overcoming a loss of ₹1,209 Cr in FY25 due to one-time costs like reverse flip tax and restructuring expenses. However, FY24 showed a profit of ₹34 Cr, with a net margin of 1.6%.
One of the key factors driving Razorpay's IPO is its upcoming MDR (Merchant Discount Rate) fee on large UPI payments, which is set to be introduced after Diwali. This fee could significantly boost the company's bottom line and help it achieve the sought valuation. The company's core online payments business is already EBITDA profitable and generating strong cash flows, allowing it to invest in allied businesses, AI, and new verticals.
Razorpay's pitch to public investors revolves around its profitability, scale, and focus on small and medium businesses. The company claims to be the market leader in digital payments processing in India, serving 105 of the 119 Indian unicorns. With a total payments volume (TPV) of over $180 Bn, Razorpay is positioned as a strong competitor against PayU and Cashfree, the latter of which reported ₹640.1 Cr in FY25.
Razorpay's strategy includes expanding into overseas markets, such as Malaysia, Singapore, the Philippines, Thailand, and Vietnam.
Written by urgent.news from Inc42's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
