Summary of this article
Paytm shares rise for second day on hopes of rate revaluation
Report highlights valuation gap between fintech firms Paytm and PhonePe
Amid buzz around PhonePe’s initial public offering (IPO), investors have pitted the fintech company against the listed peer One97 Communications, parent of Paytm. After a report highlighted valuation gaps between Paytm and PhonePe ahead of the IPO, it led to a rise in the former’s shares for two consecutive sessions.
Shares of One97 Communications rose well above 2 per cent on February 18, 2026, closing at Rs 1,199 per share on the NSE. The shares also extended gains of the previous day, when it rose more than 4 per cent.
PhonePe has filed an updated draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi), to raise around $1.50 billion. The company is targeting a valuation of around $15 billion through the issue, which consist around 10 per cent equity sale by existing investors in the company.
A report by brokerage firm Macquarie noted that Phonepe’s implied valuation is estimated between $13 billion and $15 billion, based on its last seed funding round with General Atlantic in September 2025. This valuation is about 60-90 per cent higher than Paytm’s current market capitalisation, the report said.
The report said that the gap in valuation was notable, as PhonePe continues to have negative earnings before interest, tax, depreciation and amortisation costs (Ebitda). Meanwhile, Paytm has turned positive in their Ebitda. The report said that at the indicated valuation range, shares of PhonePe are likely to trade around 37-43 times adjusted to the revenue earned in the six months ended September 2025. Compared to this, Paytm trades only around 19 times the revenue earned during the same period, making PhonePe more expensive compared to Paytm.
The report also noted that PhonePe has made a rapid expansion into several services, such as financial services distribution, which includes loans, mutual funds and in the insurance sector. The revenue contribution in these segments has risen to 13 per cent during H1 FY2026, from just 4 per cent in FY24. The report noted that further expansion of PhonePe in the segment could intensify competition for Paytm as well, as the latter derived around one-third of its revenue from the distribution business segment.
PhonePe is one of the largest fintech platforms in India, and dominates with over 45 per cent share in Unified Payments Interface (UPI) transactions, according to the RHP. The company said that as of September 2025, PhonePe had over 657 million registered users, along with nearly 47 million merchants. The UPI market share by value of the company, stood around 49-51 per cent, more than rivals like Paytm and Google Pay.
Despite leading in market share, the DRHP also highlighted several revenue risks due to recent changes in regulations. The company also continues to have a loss in operating Ebitda. Investors are likely to monitor these factors closely as the company proceeds towards its IPO processes.
