- JPMorgan gave Pine Labs a neutral rating with a 12-month target of Rs 165
- The digital payments market is expected to grow at 23-25% CAGR through FY29
- Pine Labs revenue growth is forecasted to normalize to 17% CAGR over FY26-28
Multinational brokerage JPMorgan initiated coverage on Pine Labs Ltd. with a 'neutral' rating on the stock and a 12-month target price of Rs 165, implying an upside potential of 5% over the previous close. The target is the lowest among six brokerages tracked by Bloomberg.
The company has been a pioneer in in-store payments infrastructure and affordability solutions over the last decade and built and acquired adjacencies in online payments, issuing and fintech infrastructure. The overall digital payments market remains large, with a projected 23-25% CAGR over FY24-FY29, driven by continued adoption of cards and affordability solutions such as EMIs, analysts said in a note.
However, growth momentum across the payments ecosystem is clearly slowing, they said. Device, merchant, and prepaid card growth rates have moderated, indicating that the market has moved beyond the early high‑growth adoption phase.
As a result, Pine Labs' revenue growth is expected to normalise to around 17% CAGR over FY26-28, lower than historical levels, though adjusted Ebitda is projected to grow faster due to operating leverage, according to JPMorgan.
Affordability solutions remain Pine Labs' most important profit driver, but this business is cyclical in nature and closely linked to discretionary consumer spending on appliances, electronics, and smartphones. A shift away from device‑led revenue toward affordability‑based value‑added services may improve margins, but also increases exposure to economic cycles, analysts said.
Shares of Pine Labs are down over 37% since listing in November. Out of the six analysts tracking the stock, two have a 'buy' rating on the stock, three recommend a 'hold' and one suggests a 'sell', according to Bloomberg data. The average of 12-month analyst price targets is Rs 229, which implies a potential upside of 46%.
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