Pine Labs IPO subscribed 13% on Day 1, GMP declines to 2%: Should you apply?

The initial public offering (IPO) of Pine Labs opened for public bidding on November 7. The Rs 3,900-crore issue was subscribed 11 percent on Day 1 amid a sharp decline in grey market estimates.

The IPO of the fintech company has received bids for nearly 1.29 crore shares, as against an offer size of around 9.79 crore shares, according to data on NSE. Retail investors have subscribed 54 percent of their reserved portion, while Non Institutional Investors (NII) booked 7 percent of the portion kept for them so far.

Qualified Institutional Buyers (QIB) have booked 2 percent of their reserved portion so far.

Pine Labs IPO GMP:

Ahead of listing, the unlisted shares of the company were trading with a little over 2 percent grey market premium (GMP) over the IPO price, according to data on Investorgain. The GMP has fallen from the 5 percent quoted by the site yesterday, 8 percent quoted the day before that and 16 percent quoted earlier this month.

According to IPO Watch, the unlisted shares of the company were trading with more than 5 percent GMP over the issue price.

About Pine Labs IPO:

The public issue opened on November 7 and will close on November 11. The total issue size is estimated at Rs 3,900 crore. This includes a fresh issue of shares worth Rs 2,080 crore, and an offer-for-sale of 8.23 crore equity shares by key investors including Peak XV Partners, Macritchie Investments, Madison India, Mastercard, and PayPal.

Pine Labs, based out of Noida, operates across in-store point-of-sale terminals, online payment gateways, and prepaid and gift card solutions, serving millions of merchants globally.

The price band for the IPO has been set between Rs 210-221 per share, valuing the company at approximately Rs 25,377 crore at the upper end. Investors can bid for a minimum of 67 shares, requiring an investment of Rs 14,807 at the upper price band and in multiples thereafter.

The allotments are likely to be announced on November 12, and the shares are scheduled to be listed on stock exchanges on November 14.

Should you apply?

HDFC Securities noted that Pine Labs is a technology company focused on digitizing commerce  through digital payments and issuing solutions for merchants, consumer brands and enterprises, and financial institutions, operating in India and expanding into international markets such as Malaysia, UAE, Singapore, Australia, US and Africa.

“The company is recognized as the largest issuer of closed and semi-closed loop gift cards in India by transaction value and is a leading enabler of digital affordability solutions at digital checkout points,” it said.

Angel One kept a ‘Neutral’ rating for the IPO. “At the upper price band of ₹221 per share, the company’s valuation cannot be meaningfully compared on a P/E basis as it remains loss-making atthe net level and on EV/EBITDA its trading at a premium to its listed peers leading to valuation discomfort despite strong sector and company outlook. Hence, we recommend a “Neutral” rating for investors with a medium to long-term horizon,” it said.

The challenge for Pine Labs now lies in proving the durability of the momentum—sustaining revenue growth, delivering clean operating profits, and scaling its lending and SaaS verticals alongside its core payments business, said Harshal Dasani, Business Head, INVasset PMS. "If the profit trajectory continues, Pine Labs’ debut could redefine how India’s fintechs balance growth with disciplined profitability in public markets," he added.

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