Paytm shares surge 7%, Pine Labs falls 8% | Impact of MDR on UPI transactions above Rs 2,000

Shares of One 97 Communications Ltd (Paytm) jumped 7 per cent in Wednesday's trade while those of Pine Labs Ltd fell 6 per cent following the introduction of MDR charges on UPI transactions above Rs 2,000.

Shares of Paytm jumped 7.24 per cent to Rs 1,856.50. JM Financial said the notified rate is materially above the level it had modelled in, but the carve-outs are also broader than assumed, forcing its hand to cut the eligible-GMV overlay to 20 per cent from 30 per cent earlier.

"Retaining our 20 per cent share assumption for Paytm, pass-through rises to 8 bps (from 5 bps). We now reckon FY27E/28E incremental revenue would be Rs 210 crore/470 crore and incremental adjusted Ebitda shall be Rs 140 crore/440 crore (net of UPI incentive loss)—taking overall adjusted Ebitda 9.8 per cent/19 per cent above our no-MDR estimates, with margin up 110 bps/270 bps to 14.6 per cent/20.6 per cent," JM Financial said.

JM Financial said the NPCI is yet to specify how the MDR pool shall be distributed across the value chain. Accordingly, it said the 20 per cent share in MDR assumption remains a major risk factor in our estimates, while revising its target of Rs 2,150 from Rs 1,950.

Pine Labs Ltd tanked 7.69 per cent to Rs 178.80. It is still up 10 per cent in the past one month. The stock fell even as Emkay Global upped its target price by 20.9 per cent to Rs 230 from Rs 190, implying 18.1 per cent upside. The brokerage suggested a target of Rs 2,400 for Paytm.

"Optically rich on near-term earnings, these multiples compress rapidly as operating leverage plays through — we estimate FY28-32E EBITDA CAGR of 32.6 per cent/29.8 per cent and PAT CAGR of 27.8 per cent/36.4 per cent for Paytm/Pine Labs — with the MDR stream accruing on rails and merchant relationships already in place," it said.

Emkay said key risks to its estimates are the eventual interchange-sharing formula, value leaking to merchants through competitive discounting as acquirers grapple for large-ticket flow, and elasticity at the Rs 2,000 threshold.

Meanwhile, One MobiKwik Systems Ltd shares were down 1.95 per cen at Rs 196.95 apiece.