Global brokerage Jefferies has officially started tracking Groww with a ‘Buy’ rating and a target price of Rs 180. This valuation suggests a potential profit of 26% for investors from current stock levels. Analysts at Jefferies point out a fascinating situation where, even 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 on Groww: The ‘Robinhood’ blueprint and rapid expansion
There is a striking resemblance between the growth paths of Groww and Robinhood in the US. Both companies won over millions of young investors using a simple mobile app and are now moving fast to sell them more expensive products. Jefferies researchers note that the company is no longer just a place to buy mutual funds or cheap stocks, as it is becoming a full financial supermarket.
This product velocity includes new features like Margin Trading Facility, commodity trading, bonds, and a special 915 platform for serious day traders. While these new parts of the business barely made up 1% of total revenue in FY25, Jefferies estimates they could jump to 20% by FY28. The brokerage further projects a 35% compound annual growth rate in earnings per share through FY28 because of this aggressive expansion strategy.
Jefferies on Groww: Unlocking the Rs 1.13 lakh crore zero-revenue funnel
A major reason for the bullish stance at Jefferies is the ability of Groww to convert its massive free audience into customers who pay fees. The company originally used free mutual fund tools as a clever way to acquire over 1 million users before they even started their stock brokerage business. This created a massive top-of-the-funnel advantage that competitors struggle to match.
However, Jefferies found that over 50% of the money users keep on the app earns the company nothing because it is parked in mutual funds. These analysts argue that this represents a goldmine of trapped value that is now ready to be tapped. With the recent purchase of Fisdom, the firm is moving into professional wealth management and aims to start managing 10% of total client money through these paid advisory services by FY30 to turn stagnant assets into a steady income stream.
Jefferies on Groww: Demographic goldmine and user growth
The platform has essentially captured the future of Indian money with 45% of its clients being under the age of 30. Jefferies tracks a trend called client vintage which shows how user value increases significantly over time. Data shows that once a client stays on the app for 3 to 4 years the money they keep there tends to grow by 6x to 11x.
As these young people get older and earn more, Jefferies expects the revenue earned from each person to skyrocket. It is worth noting that older and wealthier users around age 40 already bring in 5x more revenue than the younger crowd. This provides a clear roadmap for revenue growth as the current user base ages into their peak spending years.
Jefferies on Groww’s high spending: Tech as a barrier
Unlike many competitors who buy their technology from outside vendors, Groww builds every piece of its infrastructure itself. Jefferies analysts found that the company spends 11% of its revenue on technology which is roughly double the 5% spent by most other fintech firms. This custom-built system is designed to handle 50 million users and 50 million orders a day. Such scale gives them a major advantage in keeping the app stable when markets get volatile and helps them avoid the technical glitches that often frustrate retail traders on other platforms.
Jefferies sees the move from risky to secured lending for Groww
There is also a significant shift happening in the lending side of the business. Jefferies noted that credit costs were high at 7.4% in FY25 because of defaults on personal loans but the company is now moving toward Loans Against Securities. This means instead of just giving out cash they lend money against the mutual funds people already have on the app. Jefferies expects these safer and secured loans to make up 45% of the loan book by FY30 to protect the company from bad debts while improving profit margins.
Jefferies on Groww vs Ange One
Jefferies values the company higher than its rival Angel One because it believes the platform has better growth prospects and depends less on risky F&O trading. The data shows that F&O makes up 70% of transaction revenue here compared to 80% for Angel One which makes the business less vulnerable to potential regulatory changes by SEBI.
While there are risks from new competition like JioBlackrock, the brokerage maintains that the flywheel of young users makes it a top pick. The firm describe the firm as a digital developer that gave away free land in the form of Mutual Funds to millions of young people. Now that the city is full and the residents are getting richer, Jefferies believes the real payout phase for the company has only just begun.