MOFSL predicts strong growth for Pine Labs as new UPI fee lifts merchant earnings

NPCI will charge a 0.4% merchant discount rate on person‑to‑merchant UPI payments above ₹2,000 starting 15 October 2026. Pine Labs shares rose 17% in September after an 18% jump in August, while Paytm gained 5% this month following a 28% rise in August. MOFSL started coverage on Pine Labs with a Buy call and a target price of ₹250, about 30% above the current ₹192 level. In a bullish scenario the firm sees the price reaching ₹330, implying 72% upside; the bearish case keeps the target at ₹192, suggesting a 27% drop. The broker’s case rests on Pine Labs’ large merchant network, payment infrastructure, affordability products, issuing business and overseas ops. The biggest growth driver is expected to be higher earnings from the existing merchant base rather than new device sales. The Digital Infrastructure and Transaction Processing unit is the top revenue source and is projected to grow at a 24.5% compound annual rate between FY26 and FY28. EMI, BNPL and other affordability services are forecast to expand revenue at about 27% a year. Pine Labs’ issuing and acquiring platform should handle over ₹640 billion of gross transaction value in FY26 and grow 25% annually through FY28. MOFSL expects overall revenue, adjusted EBITDA and profit after tax to rise at 24%, 46% and 129% CAGR respectively over FY26‑28, with EBITDA margin climbing to 28.7% by FY28 from roughly 9% in FY24. Compared with Paytm, Pine Labs processed ₹17.15 trillion in gross transaction value versus Paytm’s ₹23.81 trillion, and served about 1.1 million merchants against Paytm’s 49 million. Pine Labs reported ₹27.1 billion in operating revenue versus Paytm’s ₹84.4 billion. Adjusted EBITDA margin stood at 21% for Pine Labs and 6% for Paytm; adjusted EBITDA was ₹5.6 billion versus ₹5 billion. Valuation multiples show Pine Labs at 15.1‑times FY27 EV/EBITDA and 11.2‑times FY28, far lower than Paytm’s 46.1‑ and 30.7‑times. Price‑to‑earnings ratios were 85.9‑times FY27 and 44.4‑times FY28 for Pine Labs, compared with 90.1‑ and 51.1‑times for Paytm. Analyst Jigar S Patel noted the stock is trading above key moving averages, RSI around 66, and suggested buying in the ₹198‑190 range with a target of ₹215 and a stop‑loss at ₹185.