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Motilal Oswal Projects 72% Upside for Pine Labs in 'Bull Case'
- •Motilal Oswal initiated coverage on Pine Labs Ltd. with a 'Buy' recommendation and a price target of ₹250, implying a 30% upside.
- •The brokerage's 'bull-case' scenario projects a price target of ₹330 by FY28, suggesting a 70% upside from the last closing price.
- •Pine Labs is well-positioned to benefit from India's expanding digital payments ecosystem, leveraging its diversified product portfolio and strong merchant relationships.
- •Motilal Oswal expects Pine Labs' revenue to grow at a CAGR of 24% between FY26 and FY28, driven by DITP, affordability solutions, online payments, and IAP business.
- •The company's adjusted EBITDA margin is projected to significantly improve to 28.7% by FY28 from 9% in FY24, aided by operating leverage and a shift to higher-margin businesses.
Key Questions Answered
Motilal Oswal initiated coverage on Pine Labs with a Buy recommendation and a price target of ₹250, which implies an upside of about 30% from its previous closing price of ₹194.15. In its bull-case scenario for FY28, the brokerage set a target price of ₹330, indicating an upside of approximately 70%.
Motilal Oswal projects Pine Labs to achieve a revenue compound annual growth rate (CAGR) of around 24%, an adjusted EBITDA CAGR of 46%, and a PAT CAGR of 129% between FY26 and FY28. Additionally, the company's adjusted EBITDA margin is expected to improve significantly from about 9% in FY24 to 28.7% by FY28.
Pine Labs' growth is driven by the expansion of India's digital payments ecosystem, diverse product offerings, and more than 1 million merchants recording 7.4 billion transactions in FY26. Key segments include the digital infrastructure and technology platform (DITP), which is expected to comprise 68% of revenue, alongside strong traction in affordability solutions, online payments, and a rapidly scaling integrated issuing and payments (IAP) business.
