PhonePe Targets ₹97,000 Crore IPO—How It Stacks Up Against Paytm

India’s fintech sector is preparing for one of the most-watched public listings in recent years. PhonePe, the Walmart-backed digital payments giant, is planning a massive IPO that could value the company at nearly ₹97,000 crore to ₹1.2 lakh crore, depending on final pricing. The upcoming public offering has sparked intense debate among investors, analysts, and fintech experts because it will directly compare the market valuation of PhonePe with its biggest rival, Paytm.

The proposed listing is expected to raise between about $900 million and $1.05 billion, depending on the final structure and market conditions. At the top end, the company may reach a valuation of around $10.5 billion. However, this still represents a lower valuation compared with the $12 billion level achieved during its previous private funding round in 2023. 

This development comes at a time when India’s digital payments ecosystem is growing at a historic pace. Unified Payments Interface transactions are crossing billions each month, and companies such as PhonePe, Paytm, and Google Pay are competing aggressively for market share. The IPO will therefore serve as a major test for the fintech business model in India.

But the big question investors are asking is simple. Can PhonePe justify such a valuation when its rival Paytm has already faced market volatility after listing?

Let us explore the data, financial metrics, market share, and future outlook to understand how PhonePe’s IPO stacks up against Paytm.

PhonePe IPO Overview: Key Numbers Investors Should Know

• Expected valuation between roughly $9 billion and $10.5 billion, equivalent to about ₹75,000 crore to ₹97,000 crore depending on pricing. 

• Estimated IPO fundraising of about $900 million to $1.05 billion through an offer for sale by existing shareholders. 

• Walmart is expected to reduce its stake by around 12 percent as part of the offering. 

• Existing investors, including Tiger Global and Microsoft, may fully exit by selling about 50.7 million shares. 

• The IPO will likely involve only existing shares and no fresh capital for the company. 

• PhonePe currently has more than 657 million registered users and about 47 million merchants on its platform. 

• The company processes roughly half of India’s UPI transaction value with a share between 49 percent and 51 percent. 

These numbers highlight the scale of the platform and explain why the IPO has captured attention from both retail and institutional investors.

#CNBCTV18Access | @PhonePe leads India’s UPI volumes, but @Paytm's diversified revenue from lending and financial services is driving stronger profitability, as fintech competition shifts from transaction scale to sustainable monetisation.

By @Bhupendra_56…

— CNBC-TV18 (@CNBCTV18News) March 4, 2026

PhonePe Market Dominance in India’s Digital Payments Ecosystem

One of the biggest strengths of PhonePe is its dominant position in India’s digital payments market. The company leads the Unified Payments Interface ecosystem, which has become the backbone of the country’s cashless economy.

Data from the National Payments Corporation of India shows that PhonePe consistently handles more than 45 percent of UPI transactions, making it the largest third-party payments application in the country.

In August 2025 alone, PhonePe processed more than 9.15 billion customer-initiated transactions worth nearly ₹11.99 lakh crore. This volume was significantly higher than competitors such as Google Pay and Paytm. 

This scale gives PhonePe an important advantage. The company has built a powerful ecosystem that includes payments, bill services, digital gold, insurance, and lending partnerships.

Why does market share matter for investors?

A large user base allows fintech companies to cross-sell financial services. When a payments platform already has hundreds of millions of users, it becomes easier to introduce products such as loans, investments, and insurance.

PhonePe has been expanding in exactly this direction. Financial services distribution accounted for only about 4 percent of its revenue in FY24 but grew to about 13 percent in the first half of FY26. 

This rapid shift shows that the company is trying to move beyond payments into higher-margin financial services.

🚨🆕PhonePe's success comes at a price—$1.4bn Esops on CXOs, othershttps://t.co/J3FK2jv6cV

I ✍🏻 for @livemint

— Mansi Verma (@MansiVjourno) March 7, 2026

PhonePe Financial Performance and Profitability Concerns

Despite its massive user base and transaction dominance, PhonePe still faces a major challenge that investors cannot ignore. Profitability.

In the first half of FY26, PhonePe reported revenue of ₹3,918 crore, which is very close to Paytm’s revenue of ₹3,981 crore during the same period. 

However, the difference becomes clear when we look at profitability metrics.

Paytm reported a positive EBITDA of ₹216 crore. In contrast, PhonePe recorded an EBITDA loss of ₹1,559 crore. 

The key reason behind this gap is employee stock option expenses. PhonePe spent around ₹1,813 crore on ESOP costs, which is about 46 percent of its revenue. Paytm’s ESOP expense was only about 2 percent of revenue during the same period. 

Why is PhonePe still losing money?

The company continues to invest heavily in technology infrastructure, marketing campaigns, and employee compensation. These investments are aimed at strengthening the platform before it enters the public market.

Some analysts believe that these costs could decline after the IPO as the company focuses more on operational efficiency.

Still, the current financial profile raises a key question for investors. Can a payments platform with thin margins justify such a high valuation?

#NewsAlert | PhonePe, backed by Walmart, is aiming for a valuation of up to $10.5 billion in its Indian IPO (Agencies)#PhonePe #Walmart #IPO pic.twitter.com/hWVloIxnYE

— ET NOW (@ETNOWlive) March 4, 2026

PhonePe vs Paytm: Key Financial Comparison

• PhonePe revenue in H1 FY26, ₹3,918 crore

• Paytm revenue in H1 FY26, ₹3,981 crore

• PhonePe EBITDA, negative ₹1,559 crore

• Paytm EBITDA, positive ₹216 crore

• PhonePe ESOP costs, ₹1,813 crore or about 46 percent of revenue

• Paytm ESOP costs, roughly 2 percent of revenue

• Expected PhonePe valuation multiples, about 37 to 43 times adjusted revenue

• Paytm valuation multiples, roughly 19 times revenue

These figures show that although PhonePe leads in payment volume, Paytm currently has stronger profitability metrics. 

Why PhonePe’s Valuation Could Still Attract Investors?

Despite profitability concerns, several factors could support a strong IPO demand.

First is the company’s massive network effect. With more than 657 million registered users and tens of millions of merchants, PhonePe operates one of the largest fintech ecosystems in the world.

Second is the growth potential of India’s digital economy. UPI transactions continue to break records every month, and digital payments penetration is still expanding into smaller cities and rural regions.

Third is the company’s strategy to build a full financial services platform. Beyond payments, PhonePe now offers services such as mutual funds, insurance distribution, lending partnerships, and wealth products.

Many investors believe that these high-margin services could transform PhonePe into a profitable fintech powerhouse over the next five to seven years.

For those using modern investing methods, IPO analysis today often combines traditional valuation with AI stock research tools that analyze transaction growth, fintech adoption trends, and long-term revenue models.

Regulatory Risks and Market Challenges

Even with strong growth, PhonePe faces several risks that investors must consider carefully.

One of the biggest concerns is regulation. Around 19 percent of the company’s revenue previously came from segments such as real money gaming transactions, credit card rent payments, and government incentives. Some of these revenue streams have already been restricted or discontinued by regulators.

Another risk is the proposed UPI market share cap. The National Payments Corporation of India has discussed limiting third-party apps to a 30 percent market share in the future. If implemented, this could affect PhonePe’s ability to grow new users.

Competition is also intensifying. Google Pay continues to dominate several segments of UPI transactions, while Paytm is expanding its lending and merchant services businesses.

Investors increasingly rely on AI stock analysis platforms and advanced trading tools to evaluate these risks before investing in large technology IPOs.

Will PhonePe IPO Re Rate Paytm Stock?

One interesting impact of the upcoming IPO could be a reassessment of Paytm’s valuation in the stock market.

Some analysts believe that if PhonePe lists at a significantly higher valuation multiple, investors may start comparing Paytm’s current market price with the new benchmark.

Brokerage reports suggest that PhonePe’s IPO valuation could be about 60 percent to 90 percent higher than Paytm’s current market capitalisation. 

If this happens, Paytm shares could see a near term re rating as investors reconsider its growth potential relative to PhonePe.

However, the opposite scenario is also possible. If PhonePe lists at a lower valuation than expected, it may signal that the market is becoming more cautious about fintech companies.

What Investors Should Watch Before the IPO?

Several key indicators will determine whether the IPO succeeds.

First, the final valuation band announced in the prospectus will influence investor demand. If pricing appears too expensive compared with Paytm’s multiples, institutions may hesitate.

Second, revenue growth trends will matter. Analysts expect fintech companies to show clear paths to profitability before public listing.

Third, macroeconomic conditions and stock market sentiment will influence the timing and pricing of the IPO.

Finally, a long-term monetization strategy will be crucial. Payments alone generate low margins, so PhonePe must prove that its financial services ecosystem can drive sustainable revenue.

Conclusion

The upcoming PhonePe IPO could become one of the most significant fintech listings in India’s history. With a potential valuation approaching ₹97,000 crore and a dominant position in UPI payments, the company enters the public market with enormous scale and brand recognition.

Yet the story is not straightforward. While PhonePe leads in transaction volume and user growth, Paytm currently shows stronger profitability metrics. This contrast makes the IPO a fascinating test of investor confidence in India’s fintech business models.

If the listing succeeds, it may reshape how markets value digital payment companies in the country. It could also trigger a broader re-evaluation of fintech stocks and growth platforms.

For investors, the key takeaway is clear. PhonePe offers scale, innovation, and massive growth potential, but it must still prove that it can turn its payments dominance into long-term profits.

The final IPO pricing and market response will ultimately decide whether PhonePe becomes the next fintech success story or another cautionary tale in the evolving world of digital finance.

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Disclaimer

The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.