Paytm, Pine Labs Price Targets Cut; Jefferies Keeps 'Buy' Rating

Introduction: A Mixed Signal for Fintech Investors

Shares of digital payment firms One 97 Communications Ltd. (Paytm) and Pine Labs Ltd. experienced a decline of up to 3% on Monday, March 23, 2026. The drop followed a report from brokerage firm Jefferies, which revised its price targets downward for both companies. Despite the cuts, Jefferies maintained its 'Buy' rating on both stocks, signaling underlying confidence in their long-term growth trajectories. This development presents a nuanced picture for investors, balancing near-term market pressures with a positive fundamental outlook.

Immediate Market Impact

The market reacted swiftly to the revised price targets. Paytm's shares were trading 2.4% lower at ₹1,028.9, while Pine Labs saw its stock decrease by 2% to ₹161.59 during Monday's session. Both stocks have been under pressure, trading significantly below their respective issue prices. The recent correction, with both stocks down between 20% and 30% year-to-date, has been attributed to broader market risk aversion and the impact of new listings on investor sentiment.

Jefferies' Revised Stance on Paytm

For One 97 Communications, the parent entity of Paytm, Jefferies trimmed its price target by 3.6%, moving it from ₹1,400 to ₹1,350 per share. The brokerage cited factors such as a higher cost of equity, potential risks from share supply from peers, and geopolitical uncertainty stemming from the Middle East conflict as reasons for the adjustment. However, the firm's decision to retain its 'Buy' rating is significant. The new target still implies a substantial upside potential of 28.6% from its previous closing price, underscoring a belief in the company's value proposition.

Pine Labs Target Adjusted Amid Growth Projections

Pine Labs faced a more significant target price reduction of 13.3%, with Jefferies lowering its target from ₹300 to ₹260 per share. Similar to Paytm, the 'Buy' rating was reaffirmed. The revised target for Pine Labs suggests an even greater potential upside of 57% from its current market price. This indicates that Jefferies views the recent stock price correction as an opportunity, believing the company's intrinsic value is not yet reflected in its market capitalization.

The Rationale Behind the 'Buy' Ratings

Jefferies' continued optimism is rooted in the strong growth forecasts for both companies. Interactions with the management of Paytm and Pine Labs revealed that both are targeting revenue growth exceeding 20% annually. This growth is expected to be accompanied by an expansion in earnings before interest, tax, depreciation, and amortisation (EBITDA) margins, driven by operating leverage as the businesses scale. Both firms are actively expanding their networks, accelerating growth in loan origination, and exploring new business segments to fuel future performance.

Paytm's Strategic Initiatives

According to Jefferies, Paytm is effectively leveraging its strong presence in merchant platforms for both payments and loan distribution. The company has shown resilience, with limited impact from recent restrictions on certain credit card payments. A key innovation is the launch of an AI-based conversation soundbox, which is currently being tested at 10,000 outlets. While its wealth and travel platforms are still in a nascent stage, they are expected to become meaningful contributors to revenue starting in FY28. Jefferies projects a 22% compound annual growth rate (CAGR) in revenues for Paytm from FY26 to FY28, with EBITDA margins expanding from 8.5% to 16%.

Pine Labs' Path to Profitability

For Pine Labs, Jefferies highlighted that revenue growth and operating leverage are key drivers for earnings. The company is focused on expanding its Digital Checkout Point (DCP) network and is capitalizing on the growth in EMI-on-card volumes. The brokerage forecasts a 23% revenue CAGR for Pine Labs over the FY26-28 period. A significant improvement in profitability is also expected, with adjusted EBITDA margins projected to rise from 20% to 27%. This efficiency could lead to a notable turnaround, potentially shifting the company from a net loss of ₹1.5 billion in FY25 to a net profit of ₹7 billion by FY28.

Analyst Consensus and Outlook

The broader analyst community remains largely positive on Paytm. Out of 21 analysts covering the stock, 15 have a 'Buy' rating, five recommend 'Hold', and only one suggests 'Sell'. For Pine Labs, analyst coverage includes two 'Buy' ratings, two 'Hold' ratings, and one 'Sell' rating. Jefferies' detailed analysis and continued endorsement, despite the price target cuts, reinforce the view that both fintech players are well-positioned within India's rapidly expanding digital payments ecosystem. The focus now shifts to execution and their ability to deliver on the projected growth and margin expansion in the coming years.