Global brokerage Jefferies has started covering Pine Labs, giving it a Buy rating and a target price of Rs 300, suggesting a potential 28% rise from today’s level.
Why Jefferies Is Bullish
The firm says Pine Labs is at an earnings inflection point and will benefit from operating leverage, higher profitability, and growth in digital payments over the next three years.
Revenue and Growth Outlook
- Projected revenue CAGR of 23% from FY25 to FY28.
- Growth driven by expansion of its Digital Checkout Point (DCP) network.
- Increasing digitisation of commercial payments and strong momentum in the EMI and prepaid card segments.
Profitability Expectations
- Contribution margins expected to stay steady at 76‑78%.
- Adjusted EBITDA margin could rise from 15% in FY25 to 27% by FY28.
- Net loss of Rs 1.5 billion in FY25 may turn into a net profit of about Rs 7 billion by FY28 if trends hold.
Market Position
- Holds 70‑75% market share in closed/semi‑closed loop cards.
- Controls 90‑95% of EMI at physical stores.
- Accounts for 15‑17% of DCP networks by count and 20‑22% by transaction value.
- Active in Southeast Asia, the Middle East, Australia and the US for prepaid and gift‑card services.
Industry Landscape
India’s digital commerce ecosystem is expanding rapidly. The number of merchants accepting digital payments grew from 45 million to 63 million in five years, and merchant payments jumped from Rs 29 trillion to Rs 117 trillion. Pine Labs is well‑placed to capture this growth across the payments value chain.
Current Share Price
At around 10:50 am, Pine Labs shares were up 4.4% at Rs 244.30 on the BSE.
Remember, this is perspective, not a prediction. Do your own research and consider your risk tolerance before making any investment decisions.