Shares of One97 Communications, the parent company of Paytm, rose 2% on Wednesday, February 18, extending gains for a second straight session. The rally follows a 4% jump on Tuesday after brokerage Macquarie published a note titled "PhonePe IPO in focus, but can Paytm re-rate?"
According to Macquarie, the proposed IPO of PhonePe could serve as a near-term valuation benchmark for Paytm and potentially trigger a re-rating in the stock.
PhonePe has filed its Draft Red Herring Prospectus (DRHP) and is reportedly targeting a valuation of around $15 billion.
Implied valuation: $13–15 billion
Stake sale: Around 10% by existing shareholders
Expected fundraise: Approximately $1.5 billion
Based on its last transaction with General Atlantic in September 2025, PhonePe's implied valuation stands in the $13-15 billion range, which is about 60-90% higher than Paytm's current market capitalisation, despite PhonePe being EBITDA-negative, while Paytm has turned EBITDA-positive.
At a $13-15 billion valuation, Macquarie estimates PhonePe would trade at 37-43 times adjusted H1 revenue, compared with roughly 19 times for Paytm.
This significant valuation gap suggests that if PhonePe lists successfully at the targeted range, investors may reassess Paytm’s current multiples, especially given its improving profitability metrics.
Macquarie highlighted PhonePe’s rapid scaling of its financial services distribution business.
The brokerage said that PhonePe has rapidly scaled up its financial services distribution business, spanning loans, mutual funds, and insurance, with its contribution to revenue rising from 4% in FY24 to 13% in H1FY26.
Further expansion in this segment could have implications for Paytm, where nearly one-third of revenue comes from distribution.
This overlap in revenue streams makes the IPO valuation even more relevant for comparative analysis.
PhonePe remains one of India's largest fintech platforms, commanding over 45% market share in UPI transactions.
As of September 2025:
Over 657 million registered users
47 million merchants onboarded
UPI market share by value hovering around 49-51%
PhonePe leads peers such as Google Pay and Paytm in transaction value share.
India’s Unified Payments Interface (UPI) ecosystem continues to expand rapidly, processing billions of transactions monthly, making market leadership a critical competitive advantage.
Despite its scale and dominance, PhonePe’s DRHP flagged potential revenue impact from recent regulatory changes.
Additionally, the company continues to operate at an EBITDA loss, even as it scales its operations and diversifies into financial services.
In contrast, Paytm has already achieved EBITDA positivity, which may strengthen the argument for a potential stock re-rating if valuation comparisons narrow post-listing.
If PhonePe successfully lists at a valuation in the $13-15 billion range:
It could provide a new sector benchmark for fintech valuations.
Paytm’s valuation multiples may come under fresh scrutiny.
Investors may reassess growth, profitability, and distribution-led revenue models.
Macquarie’s note suggests that the IPO could act as a catalyst for near-term price action in Paytm shares.
Conclusion
The proposed PhonePe IPO at a potential $15 billion valuation is shaping up to be one of the most closely watched fintech listings in India. With its dominant UPI market share, rapid financial services expansion, and large user base, PhonePe’s public debut could significantly influence sector valuations.
For Paytm, the listing may serve as a comparative benchmark, especially given that Paytm is already EBITDA-positive. As Macquarie points out, the IPO could trigger a re-rating if investors begin to reassess valuation multiples across India’s fintech landscape.