MOFSL starts Pine Labs at Buy, flags UPI MDR as a FY28 earnings lever
Motilal Oswal has initiated coverage on Pine Labs with a ₹250 target, citing growth in merchant acquiring, affordability and issuing. The brokerage sees a proposed 0.4% MDR on eligible UPI merchant payments from October 2026 as a potential recurring-revenue catalyst.
What happened
MOFSL initiated Buy coverage on Pine Labs, citing merchant acquiring, affordability and issuing growth. A new 0.4% MDR on eligible UPI merchant payments could
Key facts
- NPCI 0.4% MDR on P2M UPI transactions above ₹2,000 effective October 15, 2026
- MOFSL Buy rating with ₹250 target versus ₹192, implying about 30% upside
- Bull-case target ₹330; bear-case target ₹192
- Pine Labs DITP revenue CAGR estimate: 24.5% for FY26-FY28
- Affordability revenue CAGR estimate: 27% for FY26-FY28
What changed
MOFSL initiated Buy coverage on Pine Labs, citing merchant acquiring, affordability and issuing growth. A new 0.4% MDR on eligible UPI merchant payments could create recurring revenue. The brokerage forecasts stronger profitability through FY28 than Paytm.
Why this matters
Pine Labs’ merchant-acquiring, affordability and issuing growth thesis gains potential upside from a proposed 0.4% UPI MDR, but operators should treat the FY28 revenue benefit as contingent on policy implementation.
What to watch
- Final government, NPCI and RBI notification on whether UPI MDR begins in October 2026, including eligible merchant categories, transaction thresholds and rate caps.
- Whether MDR is paid by merchants, subsidized by government, shared with banks/PSPs, or accompanied by changes to UPI incentive programs.
- Pine Labs merchant-base growth, payment volume growth, active device additions and mix shift toward enterprise and omnichannel merchants.
- Growth and unit economics in affordability products, including EMI conversion rates, partner-bank additions and credit-loss exposure where applicable.
- Take-rate trends, adjusted EBITDA margin progression and sales-and-marketing intensity relative to the FY28 28.7% EBITDA-margin expectation.