Reduce Pine Labs; target of Rs 225: Emkay Global Financial

reduce

Emkay Global Financial' research report on Pine Labs

Pine Labs reported 17.8% YoY revenue growth, with strong growth in the Issuing and Acquiring business (up 32.5% YoY) offsetting the weakness in Digital Infrastructure and Transaction Processing (DITP) business (up 11.9% YoY). EBITDA increased 46.7% QoQ and 132% YoY on the back of operating leverage. The management highlighted that Issuing, VAS, Affordability, and Online are all growing at +30% YoY. However, DITP business’ revenue growth was dragged by the company moving away from hardware-included deals to software deals. Affordability business’ scale-up is leading to higher working capital investments, which resulted in Rs(2.15)bn FCF for H1FY26.

Outlook

We are increasing our FY26E/27E EBITDA by 4.5%/5.2% on account of strong growth in the Issuing and Acquiring business. On FY28E, the stock trades at 27x EV/EBITDA and 52.9x P/E. We increase our DCF-based TP to Rs 225 (Rs210 earlier). However, we maintain REDUCE, given rising competitive intensity.

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Pine Labs - 04122025 - emkay