Daybreak - Will Paytm still decide PhonePe’s IPO price?

Episode Date: February 9, 2026

PhonePe is heading to the public markets as India’s largest UPI player. On 21 January, the company made its IPO papers public, setting up one of the most closely watched fintech listings in years. PhonePe dominates transaction volumes, but it is listing after Paytm, whose 2021 IPO reshaped how investors value payments companies. Since then, Paytm’s stock has fallen sharply from its debut even as its business has evolved. PhonePe is seeking a valuation premium while still reporting losses and facing pressure on some revenue streams. As investors weigh scale against profitability, one question looms. Will Paytm's market memory still decide PhonePe’s IPO price?Tune in.If you have any thoughts on this episode write to us at [e-mail] with Daybreak in the subject line. You can also leave us a comment on our website or the YouTube channel here.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories. 

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. What is market leadership actually worth today? That is the question at the center of Phone Pay's upcoming IPO.

On the 21st of January, Phone Pay made its draft papers public. Now, this is a company that most people already. used, often without even thinking about it. It processes more UPI transactions than any other app in the country, and it has held that position for years. Even so, the timing of this IPO makes it rather complicated. You see, phone pay is coming to the market after a long and eventful period for India's fintech sector.

Four years ago, PayTEM went public, and that listing shaped how investors look at payment companies, especially around valuation and profitability. Ever since, PTAM stock has seen sharp swings and its public market journey has influenced expectations for the entire sector. So, PhonePay is going to be entering the public markets with that history already in place. And it does that as the market leader in transactions, but it is still loss-making. Many revenue streams that supported margins are either under pressure or have already ended. At the same time, the company is expected to seek a valuation higher than PTAM's current market value.

And that makes this IPO more than just a routine listing. It becomes a test of how investors price leadership in a business where profits have become difficult to sustain. It also raises the question of whether phone pay will be seen independently or largely through the lens of Ptm's experience. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nicka Sharma, and I don't chase the news cycle. Instead, every day of the week, my colleague, Rachel Varghees and I will come to you with one business story that is worth understanding and worth your time.

Today is Tuesday, the 10th of February. Phone pay is looking to raise around $1.3 billion through its IPO. The entire issue is structured as an offer for sale, which means no new capital will flow into the country. company. Some early investors are exiting completely. Tiger Global and Microsoft are selling their stakes in full. Walmart, meanwhile, which has invested about $700 million in phone pay and owns about roughly 72% of the company is selling about 9% of its holding. After the listing, public shareholders will own around 10% of the company. Phone pay is a decade old and has consistently led India's API ecosystem. It processes the highest number of transactions in a market with more than 80 payment

apps and its market share is close to 49%. Despite that position, phone pay is listing later than several of its peers. Paytm went public four years ago and other consumer internet companies also listed earlier in their life cycles. That timing matters because Paytm's listing still anchors investors' expectations. Paytem went public at a valuation of about $20 billion. Today, its market cap is around $7.9 billion and the stock trades roughly 40% below its issue price. Over the years, its valuation has moved sharply in both directions. But here's the thing. On financials, Ptm has recently edged ahead. To understand what is going on better, we need to low closely at PhonePace path to listing. It involved a significant structural change. In

23, Walmart paid nearly $1 billion in taxes to move PhonePace domicile from Singapore back to India, which was a requirement for listing locally. And that cost has raised expectations around the valuation. The company's last fundraise, which was in 2023, valued it at $12 billion. Bankers now expect the IPO valuation to fall between $12 to $15 billion. At that level, phone pay would list at a meaningful premium to PTAM's current market cap. But some investors compare it to Ptm's IPO valuation rather than its present value. And others see Ptm's post-listing performance as a more relevant benchmark. The market's response is ultimately going to indicate which view carries more weight.

More on this in the next segment. At a business level, phone pay and paytm share many similarities. Both earn fees from consumers, merchants and banks. Both receive government incentives tied to digital payments adoption. And both operate in a payments business where margins are thin. And because of this, both companies have focused on expanding beyond payments. They use their large user and merchant base to distribute financial products such as loans, mutual funds and insurance. These products offer strong economics than payments alone.

The difference between the two companies, though, appears in the revenue mix. I'll be bringing up a bunch of numbers now, so do pay extra attention. In the half year that ended in September, more than 80% of phone pay's operating revenue came from payments. For PayTM, on the other hand, payments accounted for only about 55%. Nearly 30% of PTAM's revenue came from distributing financial products, while for phone pay, that contribution was only 13%. Paytm began distributing consumer loans in 2017 and expanded to merchants soon after. Phone pay started distributing merchant loans only in 2023, and neither company lends directly.

Operational focus also differs. Paytm has around 45,000 people working directly with, merchants roughly twice of phone pay's on-ground strength. Over time, Pay-TM leaned more towards mergence, while phone pay focused more on consumers. But there is still room to grow. Ptm has 45 million merchants, but only about 650,000 have taken loans, while around half returning as repeat borrowers. Phone pay meanwhile has over 600 million registered users and 47 million merchants,

though it did not disclose financial product penetration in its IPO papers. At the same time, user overlap across platforms has increased. Payments apps, telecom apps and credit marketplaces often serve the same customers, limiting incremental growth opportunities. Phone pay is also facing near-term revenue pressure. In January, reports suggested that a government incentive for payment infrastructure may have ended in December 2025. And that news caused a sharp drop in PATM stock.

For phone pay, incentives contributed to about 167 crore rupees in revenue in the six months that ended in September. These revenues involved minimal additional costs. Other revenue streams have already ended. Phone pay stopped processing rent payments via credit cards after receiving a letter from the RBI. That feature accounted for about 18% of its FY25 operating rents. The Supreme Court ban on real money gaming has also reduced revenue by another 3.5%. And profitability reflects these developments. PayTM turned profitable in mid-2025 and reported $144 crore in profit for the six months that ended in September.

Phone pay, meanwhile, reported a loss of $1,44 crore rupees during the same period. Phone pay does have its strengths while going into the IPO. Walmart's backing itself carries weight with investors. The company has maintained a clean governance record as compared to paytm. It also had about 6,300 crore rupees in cash at the end of FY 2025. But public markets have changed. IPO valuations often differ from post-listing performance and many companies now trade below their issue.

price. And this puts added focus on the story that phone pay is going to present to its investors. To justify a premium, it will need to show how leadership and payments can translate into stable profitability over time. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted and produced by my colleague, Snitha Sharma and edited by Rajiv Sien.