Pine Labs market debut: Here's why analysts advise caution despite strong listing day gains

Pine Labs market debut: Here's why analysts advise caution despite strong listing day gains

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26 Aug, 2025 12:21

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The shares of Pine Labs recorded significant gains on November 14 after listing with a decent premium of 9.5 percent over its IPO price. Analysts however advised caution, citing stretched valuations and other concerns, while recommending the investment strategy different kinds of investors should take post-listing.

The newly-listed stock hit an intraday high of Rs 283.70 apiece on its debut day, marking a rise of more than 28 percent from the stock's IPO price of Rs 221 apiece.

The decent market debut and the subsequent sharp gains have beaten grey market estimates. Ahead of listing, the shares of the company were trading with a little more than 2 percent grey market premium (GMP) over the IPO price.

This comes after the Rs 3,900-crore IPO of the company was subscribed nearly 2.5 times its offer size between November 7 and November 11. The stock's market capitalisation during debut stood at around Rs 27,800 crore.

Pine Labs has made a splash in the IPO market, listing at a premium and signalling renewed investor confidence in India’s fintech story, said Jickson Sajee, Research Analyst, INVasset PMS.

The analyst however advised some some caution. "While the revenue growth and first-profit milestone are positives, the IPO values the business aggressively relative to peers — implied P/E multiples run into the thousands if annualised from Q1 profits. Pine Labs also cut its IPO size: existing shareholders trimmed their offer by 44% and the fresh issue by 20%, reflecting the management’s willingness to reduce dilution. Major backers such as PayPal and Mastercard, which had invested when valuations were much lower, now sit on significant paper gains post-listing," he said.

Sajee said that for long-term investors, the call turns on execution - accelerating device rollouts, deepening merchant relationships, and converting scale into sustained free cash flow will determine whether the stock justifies its premium or becomes a cautionary tale of hopes priced ahead of proof.

Investors will have to carefully evaluate two things, profitability visibility and competitive intensity from UPI-led innovations, said Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara. "The success of the IPO will lie in whether the valuation meaningfully reflects Pine Labs' shift toward subscription-led and omnichannel revenue. If execution stays strong, Pine Labs could emerge as one of India's few scalable fintech platforms. But for long-term investors, it is not brand strength that should attract them, but rather the fundamentals," he added.

Prashanth Tapse, Senior Vice President (Research) at Mehta Equities, said the IPO appeared "slightly priced on the higher side". "Considering Pine Labs' leadership in its segment and focus on technology-driven, high-margin solutions, we recommend that only risk-taking investors hold the stock with a long-term view. New investors may consider waiting for post-listing corrections as a potential entry point," he said.

"Customer acquisition and growing number of digital transactions indicate that underlying prospects (for Pine Labs) are strong," said Deven Choksey managing director at DRChoksey FinServ. "The challenge is making money on a sustainable basis and then valuations,” he said.

"There is a valuation frenzy across most consumer-driven technology companies as investors want to have them in their portfolios and they pay premium for that," Choksey added.

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.

"Despite the strong debut, investors remain cautious because of competitive intensity in fintech/merchant commerce, regulatory-risk in payments, and the need to deliver scaled profitability. The IPO attracted meaningful institutional participation, supported by expectations of continued growth in digital-payments adoption, merchant value-added services expansion, and improved operating leverage. Investors/traders allotted shares may consider booking part of the gain and holding the remainder for the medium to long term, with a stop-loss of 200," said Shivani Nyati, Head of Wealth at Swastika Investmart Ltd.

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