In today’s Finshots, we take a look at the Pine Labs IPO which opened for subscription today and closes on 11th November (Tuesday).

But here’s a quick side note before we begin. Trust Finshots for Finance? You’ll love Ditto for insurance.

Built by the same four friends behind Finshots, Ditto is here to make insurance simple. No spam, only honest advice to help people make smart insurance decisions.

✅Backed by Zerodha
✅Rated 4.9 on Google (13,000+ reviews)
✅7 lakh+ customers advised

Click here to talk to an IRDAI-Certified advisor for FREE.

Now on to the story.

The Story

Unless you live under a rock, you’ve probably seen the “Digital India” ads, and the QR codes, the soundboxes, the card-swipe machines. They all give us a sense of the growth this industry could promise. But behind the scenes of this digital checkout revolution is a messy stack of tech and business logic. And sitting right at the intersection of all this, is a company called Pine Labs which has launched its IPO.

If you’ve swiped a card at a retail store, bought something on EMI at Croma, or received a Westside gift card, chances are Pine Labs was involved because it quietly powers about 9.9 merchants. But to understand its business, you need to go deeper than just “the point of sales (POS) terminals”.

See, Pine Labs’ biggest play is its ‘Digital Infrastructure and Transaction business’. That’s where the card machines live. But these aren’t dumb swipe boxes, they’re more like mini app stores for digital payments. Pine Labs builds software into these hardware boxes which allows stores to collect payments, manage inventory, issue GST invoices, track rewards, enable EMIs, and even offer working capital loans. There’s a merchant-facing dashboard called ‘Pine Labs One’ that ties all of this together.

And this design gives Pine Labs two levers: scale and stickiness. Because once a terminal is installed, every swipe becomes a monetisation opportunity. Pine earns deployment fees, subscription revenue for its value-added services, and a small take-rate on transactions. But because it controls the software layer too, it can plug in new features without touching the hardware — like Dynamic Currency Conversion, loyalty program APIs, or EMI checkout. It’s a classic ‘land-and-expand’ strategy.

Then there’s the ‘Issuing and Acquiring’ arm. And although this one’s less visible to you, it’s equally important. Because it’s where Pine Labs rents out its transaction infrastructure. The segment helps brands, banks, and fintechs issue prepaid cards, employee incentives, and closed-loop loyalty programs. It also runs the backend “Credit+” stack that powers debit, credit, and forex cards. So if you’ve received a digital gift card in India, it probably could be from Pine Labs. Especially since its 2019 acquisition of Qwikcilver, which gave it a near-monopoly in that space.

But how do these two arms make money for Pine Labs?

From its POS and merchant software businesses, it charges merchants for device deployment, monthly software subscriptions, and takes a cut on every swipe. And the issuing and acquiring segment is a B2B engine where brands pay Pine Labs to run their gift cards and employee reward programs.

In FY25, the infrastructure segment (POS + merchant software) brought in ₹1,603 crore — about 70% of total platform throughput — while the issuing business added ₹671 crore. Together, they processed over 5.6 billion swipes worth a gross transaction value (GTV) of ₹11.4 lakh crore. So it’s safe to say that Pine Labs has a scaled-up fintech utility today since the time it launched its first service in the early 2000s.

But all this scale comes at a cost. Especially when you’re trying to digitise Tier-2 and Tier-3 India — where a big chunk of retailers still rely on notebooks and WhatsApp for inventory. And that’s why Pine Labs is now knocking on the public markets, raising ₹3,900 crore through its IPO. ₹2,080 crore is a fresh issue, while ₹1,820 crore is an offer for sale (OFS).

And what’s the new money going towards?

About ₹760 crore is earmarked for upgrading infrastructure like deploying more terminals, building out backend tech, and investing in faster, smarter software. Another ₹532 crore will go into repaying old debt — freeing up future cash flows and reducing the company’s reliance on outside capital. And a smaller chunk (₹60 crore) will be invested in its global arms in Singapore, Malaysia, and the UAE — where it has started replicating the India playbook. Sure, the international business is still nascent, but with 15,000 merchants already onboard, it’s not a moonshot either.

So no, the IPO isn’t just an exit event for early investors. It’s a calculated reinvestment cycle. In a business where commoditisation is the enemy and software differentiation costs real money, Pine Labs is trying to stay ahead of the curve.

But that brings us to the obvious question — can it make a dent doing so?

At first glance, Pine Labs looks like it has a wide moat. Over a million merchant touchpoints, strong brand equity, deep integrations with banks, NBFCs, and credit card issuers. It’s also the largest prepaid issuing backend in India. And finally, it has returned to profitability — over ₹4 crore in net profits in the first three months of FY26, after burning cash for years.

But look closer and you realise that the moat isn’t a castle wall. It’s more like a treadmill that, when you stop running, the market throws it off. Let us tell you why.

Start with merchant concentration: the top 10 clients account for 30% of revenues in FY25. These are large, sophisticated clients who negotiate hard and churn fast. If even one of them switches — say to Razorpay’s POS offering, PhonePe’s new offline play, or MSwipe — the impact on Pine Labs’ metrics could be significant.

Second, Pine Labs’ profitability is still precarious. The company hasn’t posted a full yearly profit yet. And while the recent profit is a turnaround, it’s come on the back of strong cost control and flat growth in the issuing business. Meanwhile, the POS business, its true engine, has to keep spending heavily just to stay competitive. Sure, its operating margin has improved from 12% in FY23 to 15% in FY25, but a large chunk of the operating cash flow still gets soaked up by technology and capex.

Then there’s the underrated moat-challenger: commoditisation. You see, the more Pine Labs scales, the more it runs into the age-old problem of payment infra. POS terminals are fast becoming commodities. The core hardware looks the same, and UPI has cannibalised low-ticket card volumes where fintech startups are bundling free or subsidised devices with cheaper integrations. So the only way to win seems to make the software indispensable.

And honestly, that’s exactly what Pine Labs is trying. It’s doubling down on cross-sells like loyalty APIs, EMI plug-ins, GST compliance, and more, which are all embedded into a sleek merchant dashboard. It’s turning its POS layer into a monetisable app store. And as it adds more features, the cost of switching away increases for merchants.

But again, differentiation has a cost. That’s why Pine Labs wants capital. Not just to grow, but to stay sticky.

It helps that the issuing business (prepaid cards and gift infrastructure) is far more defensible. Thanks to Qwikcilver, Pine Labs commands a huge share of that segment. Its gift card rails power Amazon, Flipkart, Croma, Myntra, and more. And because these are enterprise clients with API integrations and program-level contracts, they don’t churn easily.

Still, growth has not picked up exponentially. Some of it is because of macro factors such as consumption cycles, interest rates, and so on. But some of it is structural. The high-margin Indian enterprise market is largely saturated. The next leg of growth depends on digitising the unorganised middle, where merchants are less loyal, cost-sensitive, and harder to upsell. And that’s not an easy market to win.

Which brings us to valuations.

Pine Labs wants a market cap of ₹25,400 crore (about $2.9 billion). That, interestingly, is a sharp reset from its 2022 private valuation of $5 billion. So, on a revenue multiple basis, the valuation doesn’t look that frothy. It puts the asking valuation at roughly 11 times FY25 revenues. For context, Paytm still trades at nearly 10 times FY25 revenues despite continuing losses and business pivots. Pine Labs, meanwhile, is inching closer to profits, and its adjusted operating earnings have more than doubled to ₹356 crores in FY25 from ₹158 crores in FY24.

But whether it will continue this momentum and turn profitable in the coming years remains to be seen. The industry is no doubt vast and projected to grow to over ₹250 trillion by FY29, but competition and regulatory risks could also derail growth.

So yeah, while the valuation may seem modest, the real question is what are you pricing this business as? Is this a growth-stage tech company with levers to pull? A steady, cash-generating fintech utility? Or something in between? And the answer to that could tell you whether this is a high-return opportunity or a reasonable business priced for reasonable outcomes.

Until then…

If this story helped you make sense of the Pine Labs IPO, do share it with your friends, family, or even strangers on WhatsApp, LinkedIn, and X.