Groww shares up 53% against issue price in 2 days; market-cap nears ₹1 trn

Shares of Billionbrains Garage Ventures, the parent of online broking platform Groww, extended its rally, by soaring 17 per cent to ₹153.50 on the BSE in Thursday’s intra-day deal amid heavy volumes. Currently, Groww trades at a premium of 53 per cent when compared with issue price of ₹100 per share.

On Wednesday, the stock price of the stock broking & allied services company settled at ₹130.94, - up 31 per cent against its issue price.

A sharp rally in the stock price of the company has lifted the market capitalisation of Groww towards ₹1 trillion. In intra-day trade, Groww’s market capitalisation hit ₹94,764 crore.

At 11:21 AM; with a market capitalisation of Rs 92,159 crore, Groww was trading 14 per cent higher at ₹149.78 on the BSE, the exchange data shows. A combined nearly 314 million equity shares of the company changed hands on the NSE and BSE.

Groww overview, brokerages view

Groww is a fintech company providing retail investors D2C (direct-to-customer) digital investment platform to transact in various categories of securities including mutual funds, stocks, ETFs, IPO, F&O, digital gold & the US stocks. Also, it offers value-added services such as MTF (margin trading facility) and credit solutions.

Groww’s initial public offer (IPO) was fairly priced in the range of ₹95–100 per share, which is not overly aggressive compared to other Indian brokerage peers’ valuations. This reasonable pricing led to strong investor demand, primarily driven by Qualified Institutional Buyers (QIBs) at 22x subscription and Non-Institutional Investors (NIIs) at 9x, with healthy retail participation relative to other recent offerings

“Groww’s listing was slightly more than what we had expected and the implied valuation appears justifiable, backed by rapid customer growth (over 10 crore registered users), strong brand recall in retail investing, rising market share in F&O and mutual fund distribution, and a scalable digital business model with low incremental cost,” said Prashanth Tapse, Senior VP (Research), Mehta Equities.

Post listing, the brokerage firm believes Groww represents a strong long-term structural story and can act as a proxy for India’s expanding capital market participation. Investors should therefore treat it as a medium-to-long-term investment opportunity. It recommended ‘HOLD’ for the long term, given the company’s structural strengths and growth potential, while acknowledging short-term market risks with a target of ₹125-130 in the medium term.

Groww has recorded revenue / adj. EBITDA / PAT CAGR of 85 per cent / 135 per cent / 100 per cent over FY23-25. The business is sensitive to the regulatory risk and equity market volatility, analysts at ICICI Securities said in a note.

Groww reported strong topline growth, while the FY24 loss was driven by a one-time exceptional tax item arising from the merger of Groww Inc. (US) with its Indian entity. Over the years, Groww has built a strong brand and delivered robust expansion. Going forward, its focus on launching new products and services including the recent introduction of MTF, which has already helped it capture a 1.2 per cent market share and is expected to further strengthen its market position.

With continued innovation and customer-centric offerings, Groww is well positioned to drive growth, enhance annual average revenue per user (AARPU), and capitalize on its strong momentum. The company has shown exceptional performance and is poised to scale new heights through its ongoing expansion initiatives. While the valuation appears fully priced compared to peers, analysts at Choice Equity Broking had assigned a “Subscribe for Long Term” rating, supported by the company’s strong fundamentals and promising growth prospects.