Fino Payments Gets Emkay's 'Buy' Initiation As SFB Plans To Support Business

Emkay Global Research started coverage on Fino Payments Bank Ltd. with a 'buy' rating. The digital lenders is now trying to transition into small finance bank, which, along with lending will support its business growth, according to the brokerage.

It has a target price of Rs 300, which implied that Fino Payments Bank stock may see an upside of 34.35% from Friday's closing price. The target price is based on Emkay Global Research's excessive equity return on equity model.

Fino Payments Bank will likely deliver sustainable higher return on assets and return on equities, as it offers a 'unique long-term play' on the payments cum lending business.

The stock is also available at an attractive valuation. It has emerged as a profitable payment bank at a time when most payment technology firms are pressured by losses, and most small finance banks are reeling under asset quality pressure and earnings volatility, the brokerage said. The digital lender has built a unique asset-light payments bank with merchants at the core, which is catering to underserved customers.

Fino Payments Bank has applied for a small finance bank license, which should ease restrictions on deposits and open opportunities for lending and to set up other fee-based businesses. Unlike existing small finance banks, Fino Payments will likely have a healthy payments business, and stronger liability, CASA, and healthy secured lending, according to Emkay Global Research.

The lender has built a strong UPI stack, positioning it as the backbone of its digital payment services. The digital lender has also entered the B2B UPI business. It has taken these initiatives to deal with the challenges in remittances, Aadhaar Enabled Payment System, and Micro ATMs due to growing digital payments adoption, Emkay Global Research said. The bank is planning to foray into D2C UPI business and scale up its PPI proposition, which should further improve margins.

Contribution of digital payments to Fino Payments' revenue was at 20% in first nine months of financial year 2025. It's expected to grow to 31% in FY27, which will help in reclaiming overall contribution margins of 28–29%, Emkay Global Research said. CASA revenue accounts for 24% of total revenue, with annuity income contributing 10%. Fino Payments Bank boasts of the highest contribution margin of 50% which supports its profitability.