Paytm, Pine Labs Draw Brokerage Attention After New UPI MDR Framework

Paytm and Pine Labs have come into focus after the introduction of merchant charges on select UPI payments opened a new source of transaction-linked revenue for payment companies. Brokerages have since revised their earnings estimates and target prices for both stocks, although the market reaction on September 16 was far from uniform. 

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Paytm gained 2.6% to ₹1,775 during the session, while Pine Labs fell 6% to ₹182.20. 

The change follows the introduction of a 0.4% merchant discount rate, or MDR, on eligible person-to-merchant UPI transactions above ₹2,000 from October 15. The framework includes exemptions and concessional rates for certain transactions, making the actual benefit dependent on how much eligible payment volume each company handles and what portion of the MDR it ultimately retains. 

That possibility has led brokerages to revisit their expectations for the two payment companies. 

Emkay raised its target price for Paytm to ₹2,400 from ₹1,700, while increasing its Pine Labs target to ₹230 from ₹190. At Wednesday’s trading levels, those targets represented potential upside of about 35% and 26%, respectively. The brokerage estimated that the MDR-related revenue opportunity added ₹678 per share to its valuation of Paytm and around ₹43 per share to Pine Labs. 

Other brokerages also revised their numbers. Jefferies raised its target for Paytm to ₹2,150 and for Pine Labs to ₹235. JM Financial moved its Paytm target to ₹2,150 from ₹1,950. 

The revenue assumptions behind those revisions differ. Emkay estimates Paytm could generate ₹11.2 billion in UPI MDR revenue in FY28, based on a realised take rate of 10 basis points. JM Financial estimates incremental revenue of ₹2.1 billion in FY27 and ₹4.7 billion in FY28, with incremental adjusted EBITDA reaching ₹4.4 billion in FY28. 

Goldman Sachs estimated that, in a high-end scenario, the new MDR framework could lift its FY28 EBITDA estimate for Paytm by 40% to 70%. 

For Pine Labs, Emkay has estimated ₹1.55 billion in UPI MDR revenue in FY28, assuming a realised take rate of 6 basis points. Its assessment is based on the additional revenue being generated through payment infrastructure and merchant relationships already in place. 

The variation in share price movements on Wednesday indicated that the effect of the change in policy had not resulted in similar gains for the payment stocks. Paytm shares were up 37.5% YTD in 2026, while Nifty 50 had fallen 11.2%, whereas Pine Labs had fallen 22.5% in the year. 

Mobikwik had also lost its gains and was down 1.3% to ₹198.30, making the fall in the year 2026 at 13.8%. According to the report, a broker target for the stock could not be easily found. 

The MDR framework provides a commercial income generation mechanism for eligible UPI merchant transactions, but the ultimate financial benefit depends upon the transaction mix, exceptions, and the percentage kept by each payment firm.