Groww Rises 11% After Jefferies Issues 'Buy' Rating, Citing Robinhood-Like Growth

Shares of Billionbrains Garage Ventures, the parent company of stockbroker Groww, saw an 11% increase, reaching Rs 160.27 on December 19. This surge followed the initiation of coverage by Jefferies, a global brokerage, which assigned a 'buy' rating to the stock.

Jefferies set a price target of Rs 180 for Groww's stock, highlighting the company's product velocity model as comparable to that of Robinhood. The brokerage anticipates a revenue growth of 29% CAGR (Compound Annual Growth Rate) over the fiscal years 2026-2028.

According to Jefferies, Groww's valuation warrants a premium compared to its competitor, Angel One, due to its superior growth rate, healthier margins, and reduced exposure to Futures and Options (F&O).

Despite being established just four years ago, Groww boasts the highest number of active clients. Jefferies attributes this success to Groww's effective mutual fund funnel, user-friendly interface, and positive word-of-mouth referrals.

Last month, Groww announced a 12% year-over-year increase in its consolidated net profit for the September quarter, reaching Rs 471.33 crore. This growth was fueled by an expanding user base and strong asset growth.

In the corresponding quarter of the previous fiscal year (FY25), the Bengaluru-based company reported a net profit of Rs 420.16 crore.

That said, the reality is a bit more complicated. the broking firm's revenue from operations experienced a decline, falling to Rs 1,018.74 crore in the reviewed quarter from Rs 1,125.4 crore during the three months ending September 30, 2024. Groww disclosed these figures in a stock exchange filing, marking its first quarterly results post-listing earlier in December.

Groww reported a 27% year-on-year increase in its total transacting users, reaching 19 million. Furthermore, customer assets experienced a substantial 33% year-on-year surge, totaling Rs 2.7 lakh crore. This growth was driven by robust inflows in both mutual funds and equities.

On November 12, Groww made a strong debut on the stock market, closing with a premium of nearly 31% over its issue price of Rs 100. The company's initial public offering (IPO) included a fresh issue of equity shares valued at Rs 1,060 crore, along with an Offer for Sale (OFS) component comprising 55.72 crore equity shares.

The company, supported by prominent investors such as Peak XV, Tiger Capital, and Microsoft CEO Satya Nadella, intends to allocate the IPO proceeds towards investments in technology development and business expansion.

Founded in 2016, Groww has risen to become India's largest stockbroker, commanding a market share exceeding 26%.