The domestic brokerage house Motilal Oswal has initiated coverage on the fintech major Pine Labs. The brokerage has given the stock a ‘Buy’ rating with a target price of Rs 250. This indicates an upside potential of around 30% from its current market price.
The brokerage sees several growth engines for Pine Labs, ranging from digital payments and affordability solutions to its issuing business and international expansion.
Let’s take a look at the key reasons why the brokerage house is bullish on the stock and the rationale behind it –
From payments to a wider merchant platform
According to the Motilal Oswal report, Pine Labs has built a platform that connects merchants, brands and financial institutions across several payment-related services. The company serves more than 1 million merchants, 750-plus brands and enterprises, and over 200 financial institutions.
It processed a gross transaction value (GTV) of Rs 17.2 trillion through 7.4 billion transactions in FY26. Motilal Oswal believes the company’s ability to generate revenue from multiple areas could become increasingly important as its business expands.
“Pine Labs has created a complete merchant commerce platform across payment acceptance, affordability, issuing, and fintech infra,” added the brokerage house report.
Affordability could change the growth mix
As per the brokerage house report, Pine Labs’ digital infrastructure and transaction platform (DITP) will remain its largest business. However, traditional point-of-sale device subscriptions may not be enough to sustain the same pace of growth.
This is where affordability solutions such as equated monthly instalments (EMI) and buy now, pay later (BNPL) could become important. Motilal Oswal expects the affordability business to post around 27% revenue growth annually between FY26-28.
Motilal Osawal report added, “Affordability is expected to emerge as the key growth driver for DITP, offsetting the moderation in traditional device subscription revenue.”
The brokerage estimates DITP revenue to grow at around 24.5% annually during the same period.
Smaller merchants could open another growth avenue
Pine Labs’ merchant expansion could also take a different direction. According to Motilal Oswal, large retailers and organised businesses already have relatively high adoption of integrated digital checkout systems.
The next opportunity could therefore come from small and mid-sized merchants. These businesses have comparatively lower digital payment penetration, leaving more room for new deployments.
The brokerage estimates digital checkout point (DCP) additions to grow at around 17% annually over financial year 2026-28.
International business
The business processed GTV of Rs 640 billion in FY26, growing 25% year-on-year. As per Motilal Oswal report, the segment could maintain around 25% GTV compound annual growth rate (CAGR) through FY28.
International markets such as Southeast Asia, Australia, the United Arab Emirates and the United States are expected to support this expansion.
“IAP business has evolved into a scalable, transaction-led platform spanning prepaid, gift cards and issuer-processing solutions,” the report noted.
Earnings growth is the bigger trigger
Motilal Oswal expects Pine Labs’ revenue, adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA), and profit after tax (PAT) to grow at CAGRs of 24%, 46% and 129%, respectively, between FY26-28.
The brokerage also expects adjusted EBITDA margin to rise to 28.7% by FY28 from around 9% in FY24. “The introduction of a 0.4% MDR on eligible P2M transactions should benefit Pine Labs given its robust merchant-acquiring and payments franchise,” the brokerage report noted.
Motilal Oswal has valued Pine Labs at 25 times FY28 estimated enterprise value (EV) to EBITDA and arrived at a target price of Rs 250.
What next for investors?
Overall, Motilal Oswal sees multiple growth triggers helping the Pine Labs stock clock strong upside over the next 12 months. The tripling of the EBITDA margin coupled with the recent changes in UPI MDR are seen as key growth drivers.
Disclaimer: This article is based on research reports from one or more brokerage firms and is for informational purposes only. The views, target prices, and recommendations expressed are those of the respective brokerage firms and do not reflect the official policy or position of Financial Express. This should not be construed as an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor before making any investment decisions.