Pine Labs vs Paytm: MOSL Sees Pine Labs as Promising Payments Stock

India’s digital payments sector is undergoing a significant transformation as the National Payments Corporation of India (NPCI) introduces a merchant discount rate (MDR) of 0.4% on person-to-merchant (P2M) UPI transactions exceeding ₹2,000, effective from October 15, 2026. This regulatory shift is expected to create new revenue streams for payment companies, bringing firms like Pine Labs and Paytm into sharper focus among investors.

Pine Labs has demonstrated strong market performance with its stock climbing 17% in September, following an 18% rise in August. Paytm has also seen a positive trend, gaining 5% this month after a notable 28% increase in August. These gains reflect growing investor confidence as the industry anticipates the financial impact of the new MDR framework.

Motilal Oswal Securities Ltd (MOSL) recently initiated coverage on Pine Labs, assigning it a Buy rating and setting a target price of ₹250, which suggests approximately 30% upside from its current levels. In a more optimistic scenario, MOSL projects the stock could reach ₹330, representing a potential 72% gain. Conversely, the bear case target stands at ₹192, indicating a downside risk of about 27%.

MOSL's bullish outlook is grounded in Pine Labs' ability to deepen monetisation within its existing merchant base rather than relying solely on expanding payment device installations. The company’s Digital Infrastructure and Transaction Processing (DITP) segment remains its primary revenue engine, with forecasts of a 24.5% compound annual growth rate (CAGR) from fiscal years 2026 to 2028.

The company’s affordability solutions, such as EMI (equated monthly installments) and BNPL (buy now, pay later), are expected to contribute significantly, with a projected 27% revenue CAGR. Pine Labs is also scaling its issuing and acquiring platform, targeting a gross transaction value (GTV) exceeding ₹640 billion by FY26 and a 25% GTV CAGR through FY28. International expansion, especially in issuing services, offers another avenue for growth.

MOSL anticipates Pine Labs’ revenue, adjusted EBITDA, and profit after tax (PAT) to grow at CAGRs of 24%, 46%, and 129% respectively between FY26 and FY28. Additionally, the company’s EBITDA margin is expected to improve substantially, rising to 28.7% in FY28 from approximately 9% in FY24.

While Pine Labs and Paytm both operate in India’s digital payments ecosystem, their business models diverge notably. Pine Labs emphasizes POS terminals, merchant acquiring, enterprise merchant solutions, EMI/affordability offerings, gift cards, and issuing infrastructure. Paytm, on the other hand, has a dominant presence in QR code payments, soundboxes, and a broad consumer app ecosystem.

Comparative data reveals that Paytm’s platform GTV stands at ₹23.81 trillion, larger than Pine Labs’ ₹17.15 trillion. Paytm also serves a considerably larger merchant base, with about 49 million merchants versus Pine Labs’ 1.1 million. Revenue figures show Paytm at ₹84.4 billion, overshadowing Pine Labs’ ₹27.1 billion.

However, Pine Labs distinguishes itself through profitability. Its adjusted EBITDA margin was 21% in FY26, compared to 6% for Paytm. EBITDA was ₹5.6 billion for Pine Labs, slightly higher than Paytm’s ₹5 billion. Valuation multiples further highlight differences: Pine Labs trades at 15.1 times EV/EBITDA for FY27 and 11.2 times for FY28, while Paytm’s multiples are substantially higher at 46.1 and 30.7 times respectively. Price-to-earnings ratios follow a similar pattern.

This contrast underscores that Pine Labs is primarily a payment infrastructure and merchant-commerce platform, whereas Paytm’s reach extends deeper into consumer-facing services. The new MDR fee on P2M UPI transactions is expected to benefit Pine Labs more due to its strong foothold in merchant acquiring.

Technical analysis from Anand Rathi’s Senior Manager of Technical Research, Jigar S Patel, points to positive momentum for Pine Labs stock. The price has broken out of consolidation and is trading above key moving averages, supported by a relative strength index (RSI) around 66, which is above the neutral 50 level but below the overbought threshold of 70.

Patel suggests accumulating Pine Labs shares in the ₹198 to ₹190 range, with a stop-loss set at ₹185 on a daily closing basis. Successful breakout beyond recent highs could further enhance the stock’s upward trajectory.

As India’s digital payments industry continues evolving with new monetisation models and regulatory frameworks, Pine Labs appears well positioned to capitalise on its merchant-centric approach and expanding product portfolio. Investors looking at the payments sector may find Pine Labs an intriguing option distinct from, yet complementary to, major players like Paytm.