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Motilal Oswal Report
Motilal Oswal has Initiated coverage on Pine Labs Ltd. with Buy rating and has set a target price of Rs 250, 25 times FY28E EV/EBITDA, implying a potential upside of 30% from the reports current market price of Rs 192.
The brokerage believes that Pine Labs is well positioned to benefit from India's accelerating digital payments ecosystem. Its diversified product suite and deep relationships with merchants, brands and financial institutions provide multiple monetisation levers beyond traditional payment processing.
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Motilal Oswal estimates a healthy revenue CAGR of ~24% over FY26-28E, driven by stable growth in digital infrastructure and transaction platform, continued traction in affordability solutions and online payments, and a faster scale-up of IAP business.
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DITP will remain the largest revenue contributor, accounting for ~68% of revenue, while IAP business is set to outpace the broader portfolio.
The introduction of a 0.4% MDR on eligible P2M transactions should benefit Pine Labs given its robust merchant-acquiring and payments franchise. As the revenue mix gradually shifts toward higher-margin, transaction-led businesses, the brokerage estimates adjusted Ebitda margin to improve meaningfully from ~9% in FY24 to ~29% by FY28E, aided by improving operating leverage.
The brokerage estimates Pine Labs to deliver a healthy CAGR of 24%/46%/129% in revenue/ adjusted EBITDA/PAT over FY26-28E and adjusted EBITDA margin would improve to 28.7% from 9% in FY24.
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