Will PhonePe IPO Impact Paytm Stock?

The upcoming public listing of PhonePe is expected to trigger a re-rate in the stock price of its already listed peer Paytm, which is traded as One97 Communications on the bourses.

According to various media reports, overseas brokerage firm Macquarie said in one of its notes that the listing of India’s biggest digital payments platform may act as a benchmark for Paytm’s re-evaluation by investors.

As of Wednesday 12 PM, Paytm stock was trading at Rs 1,185, which is 1.28% higher that its last closing price of Rs 1,170. The stock opened at Rs 1,175 today.

In the Indian digital payments ecosystem, only Paytm has a comparable scale of business to that of PhonePe. The Walmart-backed company filed its draft red herring prospectus (DRHP) last month, seeking a valuation of $15 billion. The company is planning to offload about 10% of its shares for public trading, potentially raising $1.5 billion.

If PhonePe is able to secure that valuation, it would be worth 60–90% more than its closest rival. Interestingly, PhonePe is currently EBITDA-negative, unlike Paytm. This may prompt investors to relook at Paytm’s stock price.

Boasting over 45% market share in UPI as a third-party application provider (TPAP), PhonePe is the country’s largest digital payments platform.

According to the company’s DRHP, it had a cumulative registered user base of about 657.56 million and around 47.19 million registered merchants, covering nearly 80% of India’s 58 million trade and services merchant base. Close to 65% of the company’s users came from Tier-2 and smaller cities as of 1HFY26.

However, the company is aware of the competitive challenges it faces from peers. Its DRHP highlights that the payments application experience is increasingly being commoditised and indistinct; hence, players with the ability to build and control the full technology stack will have a powerful competitive moat. “Among the listed peers, One 97 Communications Limited (Paytm) is the only player whose business profile is comparable to PhonePe’s businesses in terms of size (above Rs 10 trillion customer-initiated transactions) and business model,” it adds.

PhonePe is gearing up to expand its financial services distribution business, which includes loans, mutual funds and insurance instruments. As a result, the share of distribution in revenue has risen from 4% in FY24 to 13% in H1FY26.