Will PhonePe’s IPO Reprice Paytm? Why the Upcoming Listing Matters for Fintech Stocks
The proposed IPO of PhonePe could become a key valuation benchmark for India’s fintech space — and investors are already debating whether it might trigger a re-rating in Paytm shares.
With reports suggesting a potential valuation of around $15 billion, the listing may force markets to reassess how they price scale, growth, and profitability in digital payments businesses. The comparison is striking: PhonePe is reportedly EBITDA-negative, while Paytm has turned EBITDA-positive — yet PhonePe could command a significantly higher valuation.
That contrast alone is enough to put investor focus back on the sector.
Why This IPO Is a Big Deal for Markets
PhonePe is India’s largest UPI platform by market share, controlling over 45% of UPI volumes as a third-party application provider. Its scale is hard to ignore: hundreds of millions of users, tens of millions of merchants, and deep penetration in Tier-2 and smaller cities.
A public listing would not just be a fundraising event — it would create a visible price discovery moment for the fintech ecosystem. Markets would get a real-time benchmark for how investors value digital payments platforms that are still in expansion mode.
That benchmark could spill over to listed peers.
Also Read : Netweb Technologies, E2E Networks Lead AI Stock Rally — Is Summit Buzz Driving Interest?
The Core Valuation Puzzle
At a $13–15 billion valuation, PhonePe could be worth 60–90% more than Paytm despite weaker profitability metrics. On revenue multiples, estimates suggest PhonePe may trade at roughly double Paytm’s valuation multiple.
This raises a fundamental question for investors:
Is the market rewarding growth and dominance more than profitability?
If the IPO is priced aggressively and sees strong demand, it may signal that investors still favour scale and ecosystem depth over near-term earnings. That could, in turn, improve sentiment toward Paytm if markets view it as relatively undervalued.
Where Competition Is Intensifying
PhonePe is rapidly scaling its financial services distribution — including loans, insurance, and mutual funds. The share of revenue from this segment has risen meaningfully.
This is directly relevant for Paytm because distribution already forms a significant chunk of its revenues. As PhonePe grows in this area, competitive intensity could rise, especially in high-margin segments.
For Paytm, this is a double-edged sword:
-
Sector re-rating potential
-
But also rising competitive pressure
Risks Investors Are Watching
The IPO story is not without complications.
A meaningful share of PhonePe’s earlier revenues came from segments that are now discontinued or restricted, including:
-
Real-money gaming
-
Credit-card rent payments
-
Certain incentive-linked revenues
Dependence on UPI incentives also remains higher than for Paytm. Additionally, potential UPI market share caps could limit future user onboarding.
High share-based compensation continues to weigh on profitability, which keeps PhonePe EBITDA-negative.
These factors may influence how aggressively investors price the IPO.
What This Means for Paytm
For Paytm, PhonePe’s listing could act as a sentiment trigger more than a direct financial event.
If PhonePe lists at a premium and sustains investor interest, Paytm may benefit from a relative valuation catch-up trade. Markets often re-rate existing players when a new benchmark enters the space.
However, if PhonePe’s valuation looks stretched or demand is muted, it could instead highlight profitability concerns across the sector.
Bottom Line
PhonePe’s IPO is shaping up to be more than just another listing — it could reset how Indian fintech is valued.
For now, the key variable is pricing. The closer the IPO valuation gets to the higher end of expectations, the stronger the potential ripple effect on Paytm and other fintech stocks.
Investors will be watching not just the IPO itself, but what it signals about risk appetite for India’s digital payments story.
