Paytm Shares Rise After Report Highlights Valuation Gap Ahead Of PhonePe’s IPO

PhonePe's IPO Plans Raise Valuation Gaps with Paytm

Investors have been pitted against fintech firm PhonePe and its listed peer One97 Communications, parent of Paytm, amid buzz around PhonePe's initial public offering (IPO).

Paytm Shares Rise Amid Valuation Gaps

• Shares of One97 Communications rose over 2 per cent on February 18, 2026, closing at Rs 1,199 per share on the NSE.
• The shares also extended gains of the previous day, when it rose more than 4 per cent.

PhonePe Aims to Raise $1.50 Billion

PhonePe has filed an updated draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) to raise around $1.50 billion.

The company is targeting a valuation of around $15 billion through the issue, which consists of around 10 per cent equity sale by existing investors in the company.

Valuation Gap with Paytm

• A report by brokerage firm Macquarie noted that Phonepe's implied valuation is estimated between $13 billion and $15 billion.
• This valuation is about 60-90 per cent higher than Paytm's current market capitalisation, the report said.

PhonePe's Business Risks

• The report said that PhonePe continues to have negative earnings before interest, tax, depreciation and amortisation costs (Ebitda).
• Meanwhile, Paytm has turned positive in their Ebitda.

The report also noted that PhonePe has made a rapid expansion into several services, such as financial services distribution, which includes loans, mutual funds and in the insurance sector.

Competition from Paytm

• The revenue contribution in these segments has risen to 13 per cent during H1 FY2026, from just 4 per cent in FY24.
• The report noted that further expansion of PhonePe in the segment could intensify competition for Paytm as well, as the latter derived around one-third of its revenue from the distribution business segment.

PhonePe's Market Share

PhonePe is one of the largest fintech platforms in India, and dominates with over 45 per cent share in Unified Payments Interface (UPI) transactions, according to the RHP.

• The company said that as of September 2025, PhonePe had over 657 million registered users, along with nearly 47 million merchants.
• The UPI market share by value of the company, stood around 49-51 per cent, more than rivals like Paytm and Google Pay.

Risks Ahead of IPO

Despite leading in market share, the DRHP also highlighted several revenue risks due to recent changes in regulations.

The company also continues to have a loss in operating Ebitda. Investors are likely to monitor these factors closely as the company proceeds towards its IPO processes.

PhonePe's IPO plans have raised questions about the valuation gap with Paytm. Stay tuned for more updates on this story.