PhonePe’s Massive $15B IPO Boom May Trigger Paytm Re-Rating

I have watched India’s fintech revolution play out from the front row over the past decade, from the first days of digital wallets to the surging popularity of UPI payments. Now, as PhonePe gears up for what may be one of the biggest fintech I.P.O.s in India, I truly believe we’re at an inflexion point that could fundamentally change how investors and users think about and compete in this space. For comparison, the last IPO of this size was Paytm’s 2021 listing, which raised ₹18,300 crore at a valuation of around $16 billion.

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In this article, I’ll walk you through PhonePe’s IPO story from my perspective, discuss why a company that is EBITDA-negative for now is getting such an aggressive valuation, how its performance compares to what Paytm has managed, and finally consider any market or regulatory risks that could impact the listing.

I’ll also talk about what this I.P.O. could mean for investors and the broader fintech ecosystem in India. You’ll know by the end of this exactly what’s at stake with this landmark IPO, and why it could very well be a game changer for both PhonePe and Paytm.

PhonePe’s Journey: From UPI Leader to IPO Favourite

I remember when PhonePe was just another UPI app scrambling for attention amid a crowded field dominated by banks and early movers like Google Pay. Today, PhonePe is not only the largest third-party app provider on UPI in India with over 45% market share, but also has a life‑to‑date registered user base of 657 million, comprising more than 237 million monthly active users and about 47 million registered merchants, of which over 11million are monthly active merchants, demonstrating its reach and depth.

Some key highlights that I find truly compelling:

Massive scale: PhonePe has hundreds of millions of registered users and tens of millions of merchants with inventory on its platform.
Merchant engagement: As of late filings, merchant transactions and daily usage are growing rapidly, signalling stickier business relationships.
Revenue growth with strategic diversification: Revenues have jumped significantly in recent years, driven by payments, financial services distribution, lending products, and even emerging offerings like digital gold and insurance.

It is this combination of scale and growth across financial verticals that anchors the quite punchy valuation that PhonePe is supposedly seeking, in the $13–$15 billion ballpark for its upcoming IPO.

The Pure OFS Structure: What Exactly Is Happening?

The one thing that sparks my interest a little more than others, and perhaps hasn’t been discussed enough in mainstream media, is the fact that PhonePe’s IPO is expected to be a pure Offer For Sale (OFS). That means the company won’t receive fresh capital from the IPO itself; instead, existing investors like Walmart, Microsoft, and Tiger Global may sell down part of their stake.

To me, that signals a dual message:

Existing stakeholders see value in crystallizing gains, which can be positive market sentiment, and
PhonePe’s access to capital isn’t its core bottleneck; it’s signaling maturity.

In other words, this is less about raising money for expansion and more about unlocking value for early investors and providing a public benchmark for PhonePe’s valuation.

But Here’s the Twist: PhonePe Isn’t Profitable Yet

You may have heard the buzz about PhonePe being this unstoppable juggernaut, and in many ways, that’s true. But as I dug into the numbers, what jumped out was that PhonePe will likely enter public markets still EBITDA negative, meaning its earnings before interest, tax, depreciation, and amortisation remain in the red at an operating level.

Contrast that with a fintech giant like Paytm, which has finally reached EBITDA positivity and stable profitability, and you can see why some investors are scratching their heads.

This brings us to a pivotal question: Are we, as investors or market watchers, valuing growth and market dominance more than profitability and cash flows?

For now, the market appears inclined to give PhonePe’s mating-growth story the benefit of the doubt, but investors will be watching intently once shares begin trading.

What the PhonePe IPO Means for Paytm and the Broader Fintech Landscape

If I had to sum it up in one line, it’s this: PhonePe may establish a new pricing bar for Indian fintech, and that has to be good news at least for Paytm and other folks running the field.

Here’s why I believe this is important:

1. Re-Rating Opportunity for Paytm

When a major private company lists and garners a strong reception, it often lifts the entire sector’s multiples, especially companies that are structurally profitable like Paytm. Analysts are already pointing to this potential re-rating effect.

If PhonePe is valued at a much higher multiple than Paytm, then it might change perceptions about Paytm’s growth versus profitability trade-off.

2. Investor Focus Shifts to Profitability and Cash Flows

In my conversations with many investors, I hear a recurring theme: growth is great, but cash profitability ultimately wins in the long run. PhonePe’s losses despite strong top-line growth highlight how execution and cost structure remain crucial.

3. Regulation Could Shape Future Market Share

One wildcard is how regulators might respond to PhonePe’s dominance. NPCI’s recommended UPI market share thresholds could now restrict next-stage onboarding at the same pace, so that PhonePe may be up against more competition or slower growth.

Regulation has always been a risk in fintech, and this could impact how public market investors price these businesses, too.

My Personal Take: The IPO Is a Catalyst, Not a Certainty

I’ve lived through several major market events, dot-com bubbles, banking crises, crypto booms and busts, and I’ve learned a few truths:

Narratives matter to markets, but fundamentals eventually win.
First-mover advantage can be fleeting without continual innovation.
Valuations are not guarantees of future returns; they reflect expectations.

In the case of PhonePe, the IPO isn’t just about a headline valuation. It’s about:

Validating India’s UPI-led fintech model
Demonstrating that consumers have no problem going beyond banks
Demonstrating that large platforms can widen into a full range of financial products

But it’s not a guarantee that all public investors will benefit, especially if competitive dynamics or regulatory changes reshape the sector.

Final Thoughts

And regardless of whether PhonePe’s debut valuation is at $13 billion or $15 billion, even beyond that, this will truly be among the few not-to-miss fintech events in India. And while the story will dominate headlines, savvy investors and market watchers should look beyond the valuation at the business fundamentals and risk factors.

Also Read: Rupee Opens at 90.65 Against Dollar: What It Means

Disclaimer

This article is general in nature and does not constitute investment advice. Remember to always consult an investment professional before making investment decisions.