The platform had over 657 million life-to-date registered users and 47 million registered merchants as of September 2025. Its UPI market share by value has hovered around 49-51% in recent years, clearly ahead of peers such as Google Pay and Paytm.
However, the IPO narrative is not straightforward. On the face of it, PhonePe’s scale appears comparable to Paytm. In the first half, PhonePe reported total revenue of Rs 3,918 crore versus Paytm’s Rs 3,981 crore. Yet, profitability diverges sharply. Paytm posted a positive EBITDA of Rs 216 crore, while PhonePe reported an EBITDA loss of Rs 1,559 crore.
A major driver of this gap is employee stock option (ESOP) costs. PhonePe’s ESOP expenses amounted to Rs 1,813 crore in the first half, nearly 46% of revenue, compared with Paytm’s far lower ESOP burden at just 2% of revenue during the same period.
Based on the last transaction with General Atlantic in September 2025, the implied valuation for PhonePe stands at around $13 billion, while media reports peg it closer to $15 billion. At these levels, Macquarie estimates that PhonePe would trade at 37-43 times adjusted revenues in H1, compared with roughly 19 times for Paytm.
Even on FY25 metrics, PhonePe’s implied valuation multiple of 16.6-19.1 times revenue remains above Paytm’s 10.5 times. This gap suggests room for a possible near-term re-rating in Paytm if investors benchmark it against PhonePe’s IPO pricing.
Macquarie flags three key risks for PhonePe that investors must weigh carefully. First, regulatory changes could hit revenues. Around 19% of PhonePe’s 1HFY26 revenues came from segments such as rent payments via credit cards, real money gaming and PIDF incentives, all of which have either been discontinued or restricted by regulators.In FY25, these streams accounted for nearly 24% of revenues. UPI incentives from the government, another contributor, form a smaller but still meaningful portion. By contrast, Paytm has lower dependence on these categories. Second, the NPCI’s proposed cap of 30% market share in UPI transactions, currently extended to December 2026, could affect PhonePe’s ability to add new users if implemented strictly.
Given that PhonePe’s market volume share is around 46%, any enforcement would limit incremental growth in payments. Third, digital gold sales, a revenue stream for fintech platforms, have come under regulatory scrutiny. Any tightening could further pressure monetisation.
At the same time, PhonePe has aggressively scaled up its financial services distribution business. Distribution revenue rose from just 4% of total revenue in FY24 to 13% in 1HFY26. This segment includes lending, mutual funds and insurance distribution. The rapid expansion here has direct implications for Paytm, where distribution accounts for nearly one-third of revenue. Increased competition could compress margins across the sector.
In its coverage, Macquarie maintains a Neutral rating on Paytm with a 12-month target price of Rs 1,265, citing both upside potential from loan distribution growth and downside risks from asset quality issues.
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