First Read: Pine Labs "4QFY26: Miss on key metrics" (Buy) Srivastava

Research evidence excerpt

First Read: Pine Labs "4QFY26: Miss on key metrics" (Buy) Srivastava

.00 -5 2.90

improved EBITDA conversion. Working capital for Q4 was in the guided range of ~14- 03/28E 5.13 4.80 -6 4.66

15% of revenue (down from ~22% in Q3) indicating normalization post-festive 03/29E 7.29 7.60 4 7.00

deployment cycle. Mgmt expects further improvement in cash generation into FY27,

indicating improvement in earnings quality. However, we foresee short-term margin Alok Srivastava

Analyst

pressure from lower-than-expected revenue base and slight reversal of operating

alok.srivastava@ubs.com

leverage - this near-term pressure is expected to create a drag on cashflow generation. +91-22-6155 6037

Key takeaways - management commentary Yash Agarwal

(1) Mgmt reiterated business transition from payments infra to a monetisation-led yash.agarwal@ubs.com

platform; (2) Company expects incremental growth to be driven by higher-margin +91-22-6155 6007

segments (affordability, flow-based services and data-led products such as SignalIQ);

Karan Paresh Trivedi

(3) Despite infra growth moderation, company reiterated 21–23.5% topline growth Associate Analyst

guidance for FY27, accounting for near-term softness arising from west Asia conflict in karan.trivedi@ubs.com

airline and travel spend; (4) Mgmt guided for CM to remain stable at ~70–75%; +91-22-6155 6177

(5) Company anticipates strong flow-through (>50% incremental CM to EBITDA) as

operating leverage comes into effect; (6) Company expects sustained EBITDA-to-cash

conversion going forward.

Valuation: Retain Buy; PT reduced to Rs 220

We trim EPS estimates by 5-6.5% for FY27/28E, implying ~31x FY28E EV/EBIT (~35%

discount to Paytm). Given the estimate revisions, along with slightly higher WACC and