Pine Labs shares rose over 2% after Q2 results. Should you buy, sell or hold?

Pine Labs shares rose 2.5% during Thursday's trading session after the payment solutions firm reported a consolidated net profit of ₹6 crore for the quarter ending September, marking a return to profitability following a loss of ₹32 crore in the same period last year.

In the second quarter of FY26, the company achieved revenue from operations amounting to ₹650 crore, which represents an 18% increase from ₹552 crore in the equivalent quarter of the previous financial year.

The profit after tax (PAT) increased by 25% compared to the previous quarter, which saw ₹5 crore in Q1FY26, while the topline also saw a nearly 6% rise quarter-on-quarter, compared to ₹616 crore in the April-June period of FY26.

The adjusted Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) surged 62% year-on-year to reach ₹122 crore, with margins improving from 14% to 19%, demonstrating significant operating leverage.

A significant decrease in ESOP expenses offered some relief. ESOP costs decreased to ₹29 crore from ₹66 crore in the prior quarter, indicating a 28% drop compared to the same period last year. The proportion of ESOP expenses relative to revenue fell to 4% from 7% both a year earlier and in the previous quarter.

This announcement marks Pine Labs' first set of earnings since it made its market debut in November of this year.

According to a report by Emkay Global Financial Services, Pine Labs experienced a revenue growth of 17.8% year-over-year, with significant increases in the Issuing and Acquiring sectors (up 32.5% YoY) offsetting the slower growth in the Digital Infrastructure and Transaction Processing (DITP) sector (up 11.9% YoY). EBITDA saw a rise of 46.7% quarter-over-quarter and 132% year-over-year due to operational efficiencies.

Further, Emkay Global highlighted that the management pointed out that Issuing, VAS, Affordability, and Online segments are all growing at rates exceeding 30% year-over-year. Nonetheless, revenue growth in the DITP segment was hindered by the company's shift from hardware-inclusive agreements to software-focused contracts. The scaling up of the Affordability segment has led to increased working capital investments, resulting in a free cash flow of ₹(2.15) billion for the first half of FY26.

“We are increasing our FY26E/27E EBITDA by 4.5%/5.2% on account of strong growth in the Issuing and Acquiring business. On FY28E, the stock trades at 27x EV/EBITDA and 52.9x P/E. We increase our DCF-based TP to ₹225 ( ₹210 earlier). However, we maintain REDUCE, given rising competitive intensity,” said the brokerage.

Pine Labs shares today

Pine Labs shares today opened at ₹250 apiece on the BSE, the stock touched an intraday high of ₹253.90 per share, and an intraday low of ₹245.20 per share. The stock was listed at a 13.52% premium at ₹251 over the issue price. The stock is currently trading at ₹253.90, up 14.88 over the issue price of ₹221.

Following the listing, there has been a significant sell-off, and the stock has experienced volatile sessions.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.