Make Paytm look cheap next to PhonePe—and you might stumble into a trap. Paytm, the parent company of One 97 Communications, has been drawing attention as PhonePe gears up for a possible public listing. The curiosity is natural: Paytm is the closest listed peer to PhonePe. Both fintechs started out by enabling consumer and merchant payments via UPI, then broadened into selling financial products like loans and insurance broking.
In a recent note, Macquarie Capital Securities analysts argued that Paytm stacks up well against PhonePe. Their takeaway is that Paytm is already EBITDA-profitable, which could support a re-rating if expectations shift in its favor (source: Livemint discussion of the IPO strategy and related tax/incentive considerations). Paytm’s current market capitalization is around ₹77,000 crore, while PhonePe is reportedly eyeing a valuation near $15 billion. That converts to roughly ₹1.35 trillion using a 90:1 dollar-rupee rate. Since PhonePe is not EBITDA-profitable yet, a market-cap-to-revenue comparison becomes more telling. If we annualize Paytm’s H1 FY26 net revenue (the six months to September), the implied market-cap-to-revenue multiple sits around 10x for Paytm, versus about 17x for PhonePe, a difference that seems reasonable at first glance.
Even so, investors should weigh two major risks before tilting toward Paytm.
First, the valuation gap between the two could persist or widen rather than shrink. A useful parallel is Billionbrains Garage Ventures Ltd (Groww) versus Angel One Ltd. When Groww launched its public issue, Angel One stood out as the sole major listed discount broker. Yet Groww still trades at a substantial premium to Angel One. Bloomberg consensus estimates put Groww at about 29x FY28 earnings per share, compared with roughly 16x for Angel One. The market may believe Groww will continue to outpace growth even beyond FY28.
A contributing factor to Groww’s premium over Angel One—and a plausible echo for PhonePe versus Paytm—is user base size. Groww’s larger NSE active customer base, around 12 million, dwarfs Angel One’s roughly 7 million. A bigger customer base enables more cross-selling of financial products.
A similar line of reasoning could justify a premium for PhonePe over Paytm. PhonePe reportedly has about 238 million monthly active users and holds roughly 46% of transaction volume in FY26 so far. Paytm, by comparison, serves about 76 million monthly active users and accounts for roughly 7% of transaction volume. Like Groww, PhonePe has a bigger opportunity to cross-sell, expanding its distribution reach. In fact, Macquarie notes that PhonePe has been gaining ground in the distribution business, narrowing the gap with Paytm in recent years.
In H1 FY26, Paytm’s distribution revenues were about double PhonePe’s, while in FY24 the gap was tenfold. If PhonePe stays aggressive, competition could intensify and squeeze Paytm’s margins. About 30% of Paytm’s revenue comes from distribution, which is a sizable portion of their business mix.
Second, Paytm’s absolute valuation already looks elevated. While the relative comparison (market-cap-to-revenue) is helpful, Paytm’s enterprise value to EBITDA stands around 32x, based on Bloomberg consensus estimates for FY28.
There is a real headwind for PhonePe’s market share from the National Payments Corporation of India, which could cap any single UPI app at about 30% of total transaction volume after 2026 to reduce concentration risk. If such a cap is enacted, Paytm would not be the only beneficiary; competitors like Jio Financial could also seize the space that PhonePe leaves behind.
Even Macquarie remains cautious on Paytm’s absolute valuation, assigning it a Neutral rating. Their takeaway is simply that Paytm’s current valuation appears lower than what PhonePe might justify, rather than declaring Paytm an obvious bargain.
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