Reduce Pine Labs; target of Rs 210: Emkay Global Financial

Emkay Global Financial' research report on Pine Labs

However, we expect competitive intensity to rise across both segments, as adjacent-market players are increasingly targeting these pools. In merchant acquisition, industry growth is being led by digitization of small merchants, for whom low-end devices and strong distribution capabilities are crucial success factors. While Pine Labs is ramping up shipments of low-end Mosambee devices, its distribution is still weaker than peers’, limiting its right-to-win in this segment. Its India gift-card business is profitable albeit growth-constrained, while its international business is scaling up rapidly although it operates at low and volatile margins. We model 19% revenue CAGR for FY25-28E which translates into 53% EBITDA CAGR on a low base. On FY28 estimates, the stock trades at 28.1x EV/EBITDA and 56.4x P/E. Given the rising competition, we see an unfavorable risk-reward.

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