The Groww share price rose 7.22% to an intra-day high of Rs 172.50. The stock has run almost 17% over the last five trading sessions. Recently, international brokerage house Jefferies initiated coverage on Groww with a ‘Buy’ call and set the target price at Rs 180. This valuation suggests a potential upside of 26% over the next 12 months. However, the domestic brokerage house JM Financial also initiated coverage on Groww, but with a ‘Sell’ rating. Their price target indicates room for as much as 11% downside.
Here is a detailed analysis of the contradicting brokerage views and the investment approach going forward-
Jefferies on Groww
Jefferies pointed out that though Billionbrains Garage Ventures (Groww) is India’s biggest broker by active users with a 26% market share, it faces a massive revenue gap. Nearly half of the money sitting on the platform, which is about Rs 1.13 lakh crore held in mutual funds currently, brings in zero revenue. To fix this, the Jefferies team expects Groww to mimic the product velocity of US giant Robinhood and roll out new services to turn those free users into paying ones. Jefferies noted that the company is no longer just a place to buy mutual funds or cheap stocks, as it is becoming a full financial supermarket.
JM Financial on Groww
JM Financial has initiated a ‘Sell’ rating on Groww, with a target price of Rs 144, implying a downside of 10.6% from the current market price. The brokerage expects Groww to grow its revenue and net profit at a 34% and 45% CAGR, respectively, over FY26-FY28. The company has seen its broking revenue fall 30% over 2 quarters in FY25 (Q4 FY25 over Q2) following regulatory action from October 2024, which is a huge tail risk for its business model.
“Given the company’s strong customer acquisition, we value it at 1SD above Angel One’s historical P/E, valuing it at 21x FY28 EPS of Rs 7,” said JM Financial.
About Billionbrains Garage Ventures
The Groww IPO opened on November 04 and closed on November 07 at a price band of Rs 95-Rs 100. The company raised over Rs 6,600 crores via a combination of fresh issue and Offer For Sale (OFS). The IPO was listed on November 12 at a premium of 12% at Rs 112 on the National Stock Exchange.