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Pine Labs share price jumps 5%: Why new UPI MDR rules could boost earnings - Check new target
With a shift to a recurring revenue model from the new UPI framework, Pine Labs could see a 20% EBIT increase. Following NPCI's MDR implementation, the company’s stock has risen 5%.
Pine Labs share price on Thursday, September 17, with the stock rising 5% as investors assessed the potential benefit from the National Payments Corporation of India's (NPCI) decision to introduce a Merchant Discount Rate (MDR) on certain UPI transactions.
The new framework could create a recurring revenue stream for payment companies, putting Pine Labs in focus given its exposure to merchant acquiring and payment acceptance.
Pine Labs stock jumped as much as 5% to ₹194.45 during the day's trading session. Moreover, it has been giving strong returns in recent times. It added 9% in 1 week, 16% in 1 month, 24% in 3 months and 18% in 6 months.
The firm is set to benefit from NPCI's move to introduce a 0.4% MDR on Person-to-Merchant (P2M) transactions above ₹2,000, starting October 15, 2016.
The government has notified a 40-basis-point merchant discount rate on P2M UPI transactions above ₹2,000. However, most of the UPI ecosystem remains outside the framework. Person-to-person payments, transactions up to ₹2,000 and small merchants receiving up to ₹100,000 a month through UPI QR codes will not attract the charge.
Pine Labs is a technology company providing digital payments and issuing solutions for merchants, consumer brands, enterprises and financial institutions in India and internationally. Its Digital Infrastructure and Transaction Platform provides technology platforms under the Pine Labs, Mosambee, Benow, Setu, Qfix and Fave brands. These platforms enable merchants to accept in-store and online digital payments through debit cards, credit cards, prepaid instruments, wallets, QR codes, UPI, loyalty points, pay later and online fee collection, among others.
Pine Labs has a smaller UPI base compared to bigwigs like Paytm, Mobikwik, but this could mean a sharper earnings impact from the new MDR framework. The new revenue stream could potentially contribute about 20% to its EBIT and profit before tax estimates.
Emkay Global believes the development will expand the industry's revenue pool, make the payment business structurally self-sustaining and make the business model more resilient.
The brokerage has maintained its 'Buy' rating on Pine Labs and raised its target price to ₹230 from ₹190.
According to Emkay Global, the MDR will be distributed among the issuing bank at 16 bps, acquiring bank at 12 bps, payer TPAP at 8 bps, and payer PSP bank at 4 bps. While the issuing bank retains the largest portion, acquirers such as Paytm and Pine Labs would retain the acquiring bank's 12 bps share.
On conservative assumptions of a 6-bps realised take rate for Pine Labs, Emkay estimates FY28 UPI MDR revenue of ₹1.55 billion.
Emkay estimates that the discounted value of Pine Labs' FY28 UPI MDR revenue stream could add ₹51.5 billion to the company's valuation, equivalent to about ₹43 per share. This forms part of the basis for its revised ₹230 target price.
The new UPI framework effectively converts a payment ecosystem that has largely operated without transaction-linked revenue into a potentially recurring commercial model. Emkay describes the shift as one from a discretionary annual subsidy to revenue that is “contractual, recurring, and scales with value.”
Pine Labs held its 28th Annual General Meeting (AGM) on September 16, 2026, through video conferencing, with 101 members participating. The meeting, chaired by Chairman, Managing Director & CEO B. Amrish Rau.
Shareholders considered and adopted the audited standalone and consolidated financial statements for FY2025-26 and approved the reappointment of Kush Mehra as Whole-Time Director.
They also approved the reappointment of B S R & Co. LLP as statutory auditors and revisions in remuneration for Kush Mehra, Amrita Gangotra, Maninder Singh Juneja and Smita Chandramani Kumar.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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