Kotak Equity Research initiated coverage on Billionbrains Garage Ventures (Groww) with a ‘Buy’ rating and a target price of Rs 190. The price target implies that the stock has room to rally nearly 20% from current levels over the next 12 months.
Kotak expects Groww to post muted earnings in FY26, but going forward, FY27 and FY28 are likely to see strong growth.
Building scale with trust and technology
According to Kotak Equity Research, Groww’s product‑first DNA, organic acquisition engine, and tech focus have created a platform that scales faster and monetises better than peers while continually broadening revenue streams beyond turnover‑linked broking. Groww’s journey so far demonstrates consistent share gains across products, pricing power, improving unit economics and a high-potential wealth pivot.
Poised for profitable scale-up
Kotak expects Groww to deliver 20% revenue CAGR in FY26-28. With a business model geared for high profitability, EBITDA margins will likely expand to 65% by FY28 from 60% in FY25. Scale benefits and declining cost intensity underpin margin improvement, aided by new revenue drivers such as MTF and commodities, which likely operate at superior margins.
Expanding monetisation sources
Beyond traditional turnover-linked broking, Kotak highlighted how Groww is aggressively diversifying its revenue streams into high-potential areas. These include the Margin Trading Facility (MTF), commodities, consumer credit (personal loans and loans against securities), and a strategic pivot into wealth management and affluent advisory services.
Scalable in-house technology moat
Groww’s proprietary technology stack, which includes its own UPI payments system and charting tools, provides a significant competitive advantage in speed, reliability, and cost, as per Kotak. Their “pod” based deployment system allows them to ship code weekly, resulting in over 2,000 platform deployments annually, a pace that is difficult for new competitors to replicate.
Operating leverage and rising profitability
The business model is geared for high profitability, with adjusted EBITDA margins expected to expand to 65% by FY28. This improvement is underpinned by scale benefits and a sharp decline in marketing intensity. The company’s marketing costs as a percentage of revenue fell to 12% in FY25 from 21% in FY23. The brokerage expects FY26 to be a year of flat earnings growth, but followed by a 35% growth in FY27 and 25% in FY28.
Kotak Equities on Groww: Key risks to watch
However, Kotak highlighted two major risks as well-
Market cyclicality
Groww’s revenue is heavily linked to retail trading volumes, which are inherently cyclical. Kotak believes that a prolonged market downturn or a ‘retail-led market bubble’ (citing the China 2015-25 bubble as a precedent) could shatter investor confidence and depress participation for several years.
Regulatory headwinds
The retail derivatives (F&O) segment is highly sensitive to policy changes. While active users have shown resilience to rules implemented in FY26, renewed measures—such as higher margin requirements, suitability tests, or increased lot sizes—could dampen activity and delay revenue growth. Kotak also noted the risk of regulatory processes extending into other areas of broking.