Pine Labs Shares Slide 5.6% After Q1 Profit Slumps 67% QoQ

Shares of fintech major Pine Labs slumped as much as 5.6% to touch an intra-day low of ₹144.4 on the BSE today, a day after the company released its financial results for the first quarter of FY27. 

Investor concerns about the fall in margins during the quarter under review led to the decline in the share prices. 

The stock ended today’s trading session 5.39% lower at ₹144.75 on the BSE. The company’s market capitalisation stood at ₹16,700 Cr (around $1.74 Bn). 

Yesterday, Pine Labs reported a 67% decline in its profit to ₹19.6 Cr in Q1 FY27 from ₹59.4 Cr in the preceding March quarter. On a yearly basis, profit rose over 4X from ₹4.8 Cr. 

Operating revenue rose 20% YoY and 5% QoQ to ₹736.9 Cr. During the quarter, the platform processed approximately ₹4.22 Lakh Cr (about $45 Bn) in gross transaction value (GTV) and 201 Cr transactions.

Brokerage Citi issued an ‘Accumulate’ rating for Pine Labs. Last month, it had given a ‘Buy’ rating as it expected adjusted EBITDA margins to expand to 26% in FY27 on the back of improved monetisation and growth avenues highlighted by the company’s management. 

Following the Q1 results, the brokerage also revised down its target price to ₹215 from ₹235 earlier. 

It noted that the company’s growth was in line with the market’s expectation, even as its margins fell during the quarter owing to growth investments made recently to improve its tech and AI capabilities. This included building AI-based credit underwriting platform SignalIQ, credit line on UPI solutions, marketing and adtech solutions suite called GrowthHub, and EMI product expansion in the UAE and Singapore. 

During the quarter, the company also announced the acquisition of ecommerce-focused SaaS startup Shopflo in an all-cash deal worth ₹88 Cr to increase its presence in the ecommerce and digital merchant payments space. 

Higher Investments Compress Margins 

During the post-earnings call, management attributed the margin pressure to front-loaded investments in cloud infrastructure, network upgrades, AI capabilities, and international expansion.

The company said quarterly cloud costs increased by ₹10-12 Cr, while network expenses rose by another ₹10 Cr owing to infrastructure upgrades for large-scale POS deployments, overseas expansion and enhancements to its technology platform.

Consequently, its expenses during June the quarter surged 60% to ₹728.1 Cr from ₹454 Cr in the same quarter last year. The company’s adjusted EBITDA stood at ₹126 Cr, translating into a margin of 17.1%. In Q4 FY26, its adjusted EBITDA stood at ₹146 Cr, while adjusted EBITDA margin stood at 21%. 

Management said adjusted EBITDA would have been around ₹140 Cr in the absence of the front-loaded investments and expects margins to improve over the remainder of FY27 as transaction volumes increase and one-time costs normalise. It added that a significant portion of the higher network expenses and most of the incremental cloud costs are expected to taper off over the coming quarters. 

Management also said its lower-margin distribution business has been growing faster than its processing business, particularly in newer international markets such as Singapore and the US. While this has weighed on contribution margins in the near term, the company expects to cross-sell higher-margin processing services over time as customer relationships deepen. 

Pine Labs also expanded its enterprise sales team by 500 employees over the past six months to tap growing demand from large merchants across online and offline payments. The company expects the productivity benefits from these hires to become more visible in the second half of FY27. 

Apple Pay To Support Payment Volumes 

Looking ahead, Pine Labs expects growth to be driven by higher adoption of UPI and credit-based payment products.

Management also said the potential launch of Apple Pay in India could boost credit card transaction volumes, helping drive payment activity on its platform.

“As credit card plus UPI continues to grow in the market, credit card transactions will again be back in the field. We are already getting to see there is almost 10-15% growth in credit card payment transactions in the market,” Pine Labs noted in the call today. 

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