Pine Labs IPO

Market Leader in Gift Cards and Digital Affordability: Pine Labs is India’s largest issuer of closed and semi-closed loop gift cards by transaction value in FY24, within a ₹3.8 trillion prepaid card market (CY 2023). It also leads digital affordability solutions at checkout points (DCPs), where India processed ₹19.3 trillion worth of payments in FY24. It ranks among the top five in-store digital platforms by transaction value, as per Redseer.

Strong and Long-Standing Ecosystem Partnerships: Pine Labs has built long-term, trusted relationships with 666 leading brands (e.g., Amazon Pay, Flipkart, LG) and 164 financial institutions (e.g., HDFC Bank, ICICI, Axis), some of which span over 10 years. This deep integration across the ecosystem strengthens its platform stickiness, enables cross-selling, and drives recurring transaction volumes, creating a defensible moat and reinforcing its role as a “growth partner” to merchants, brands, and banks.

Steady Growth in Platform GTV and Revenue: The company’s Platform GTV grew from ₹2,194 billion in FY22 to ₹3,966.69 billion in FY24. In 9M FY25 alone, it reached ₹3,351.72 billion. Revenue from operations also increased at an annual rate of 20.14% in the last two years from ₹957.9 crore in FY22 to ₹1,382.6 crore in FY24.

Improving Profitability Margins: Pine Labs reported an adjusted EBITDA margin of 22.47% in 9M FY25, up from 13.22% in FY24. It outperformed Paytm (-15.47%) and even Zaggle (9.71%) during the same period, indicating improving efficiency and strong control over operational costs.

Strong Merchant Network and Prepaid Card Ecosystem: Pine Labs connects with 644.5K merchants and has issued over 3.2 billion prepaid cards. This wide reach builds strong network effects between merchants, brands, and financial institutions, helping the company scale faster and lock in users.

Full-Stack Digital Payment Platform: Pine Labs offers a full suite of payment products, covering in-store payments, online checkouts, EMI options, and fintech tools. No other Indian competitor provides such an integrated offering, making it a unique, one-stop solution for merchants and enterprises.

Smart Acquisitions Fueling Innovation: The company has made several strategic acquisitions like Qwikcilver, Setu, and Mosambee to strengthen its offerings, expand capabilities, and enter new verticals. This proactive approach helps Pine Labs stay competitive and innovate consistently.

Weak Returns (RoNW): Pine Labs had a negative return on net worth of (9.18%) in FY24, which means it lost money instead of earning on shareholders’ capital. But it’s better than Paytm’s (10.82%), however, still lags far behind Zaggle, which gave a solid 14.11% return. Considering EPS, Pine Labs reported a loss of ₹2.23 per share in FY24. That’s much smaller than Paytm’s big loss of ₹22, but far from Zaggle’s profit of ₹4.06.

Continued Financial Losses and Cash Burn: Pine Labs has a history of bleeding losses in the process of acquiring growth. It recorded a loss of ₹22.6 crore in FY22, which surged to ₹187.2 crore in FY24. It also had negative operating cash flow of ₹35.5 crore in FY24, raising questions on sustainability without continued funding.

High Revenue Dependence on Few Customers: Its top 10 customers contributed 35.24% of FY24 revenue and 31.02% in 9M FY25. If even a few clients leave or reduce business, it could significantly affect revenue and profitability, as many contracts are non-exclusive and cancellable.

Weak Internal Controls Flagged by Auditors: Material weaknesses were identified in its IT systems during audits for FY22 and FY23, including poor user access and program change procedures. These were also seen in two subsidiaries for FY23 and FY24, posing risks of errors or fraud.

Limited Scale vs Larger Peers: Despite growth, Pine Labs is much smaller than Paytm. Its GTV for 9M FY25 was ₹3,351.72 billion vs Paytm’s ₹13,770 billion. Its merchant base stood at 273.3K, compared to Paytm’s 43 million, highlighting a much smaller operational footprint.

Regulatory Risks and Past Penalty: Pine Labs operates in a tightly regulated sector. A merged entity, Qwikcilver, was fined ₹1 crore by the RBI in 2020 for PPI rule violations. Any regulatory lapse can attract penalties, increase compliance costs, or even risk business authorizations.