PhonePe’s $15 Billion IPO On Cards; How It Can Trigger A Re-Rating For Paytm?

PhonePe IPO issue is reportedly between 13 to 15 Billion. (Image: X) The proposed public listing of PhonePe, reportedly valued between $13 billion and $15 billion, is shaping up to be one of the most closely watched offerings in India’s fintech landscape. According to a recent note by Macquarie Equity Research, the IPO could act as a catalyst for a valuation reset of Paytm, particularly if investors benchmark the two platforms against each other. PhonePe dominates the Unified Payments Interface ecosystem, having over 45 per cent market share as a third-party app provider. By value, its share has consistently hovered between 49 per cent and 51 per cent, keeping it comfortably ahead of competitors such as Google Pay and Paytm. As of September 2025, the company had amassed more than 657 million registered users and 47 million merchants, underscoring the scale of its payments network, according to a report from The Economic Times. Revenue Scale Similar, Profitability Story Very Different While PhonePe’s operational footprint rivals that of Paytm, the financial profiles of the two companies diverge sharply. In the first half of FY26, PhonePe reported revenue of Rs 3,918 crore, narrowly trailing Paytm’s Rs 3,981 crore. However, profitability tells a different story, Paytm delivered a positive EBITDA of Rs 216 crore during the period. In contrast, PhonePe posted an EBITDA loss of Rs 1,559 crore. A key contributor to this gap lies in employee stock option (ESOP) costs. PhonePe’s ESOP expenses stood at Rs 1,813 crore in the first half, nearly 46 per cent of revenue, while Paytm’s ESOP burden was significantly lower at about 2 per cent of revenue. Based on its last funding round with General Atlantic in September 2025, PhonePe’s implied valuation is roughly $13 billion, though some media reports suggest it could touch $15 billion, as per the report. At that range, Macquarie estimates the company would trade at 37–43 times adjusted H1 revenues, compared to about 19 times for Paytm. Even on FY25 numbers, PhonePe’s multiple of 16.6–19.1 times revenue exceeds Paytm’s 10.5 times, hinting at potential room for a re-rating in Paytm if IPO pricing is aggressive. Market Share Cap Risks Macquarie has highlighted several risks investors should monitor closely. Nearly 19 per cent of PhonePe’s first-half FY26 revenue came from segments such as rent payments via credit cards, real money gaming and PIDF incentives, areas that have either been restricted or discontinued by regulators. In FY25, these categories contributed about 24 per cent of revenue. Additionally, the National Payments Corporation of India’s proposed 30 per cent cap on UPI market share, currently extended until December 2026, could constrain PhonePe’s ability to expand further if strictly enforced. With market share volumes around 46 per cent, any implementation would likely limit incremental growth. Digital gold, another monetisation avenue for fintech firms, is also under regulatory scrutiny, potentially adding further pressure. Financial Services Push Intensifies Competition Beyond payments, PhonePe has rapidly expanded its financial services distribution arm. Distribution revenue rose from just 4 per cent of total revenue in FY24 to 13 per cent in the first half of FY26, spanning lending, mutual funds and insurance. As per the report, this expansion has direct implications for Paytm, where distribution contributes nearly one-third of revenue. Heightened competition in lending and wealth products could weigh on sector margins. According to the report, Macquarie currently maintains a Neutral stance on Paytm, with a 12-month target price of Rs 1,265, balancing upside from loan distribution growth against risks tied to asset quality. Get Latest News live on Times Now along with Breaking News and Top Headlines from Business, Companies and around the world. Latest News Priya Raghuvanshi author She is working as a Chief Copy Editor at Times Now’s Business Desk, where she covers key developments in the stock market, Indian corporates across se ... View More News Business Markets End of Article