Groww Shares Extend Rally On Jefferies’ Bullish Commentary
Billionbrains Garage Ventures Ltd., the parent company of Groww, saw its share price rise by 6.58% on Monday, following a spike of over 13% on Friday. This rally comes on the heels of Jefferies’ bullish commentary on the discount broker, highlighting its strong growth and drawing comparisons to the American trading app, Robinhood.
Jefferies initiated coverage on Groww with a ‘buy’ rating and a target price of Rs 180, stating that ‘Groww is Groww-ing up to be Robinhood.’ The brokerage acknowledged Groww’s strong growth and its position as the largest stockbroker in India, with a similar growth path to Robinhood.
Comparison To Robinhood
The comparison to Robinhood is significant, as the American trading app has been a huge success in the US market. Founded by Vlad Tenev and Baiju Bhatt, Robinhood started off with the promise of making trading easier and accessible to everyday users, specifically targeting the young audience. Similarly, Groww has been successful in India, with its user-friendly platform and low-cost trading options.
However, on Monday, JM Financial initiated coverage on Groww with a ‘sell’ rating and a target price of Rs 144. The brokerage noted that broking orders fell 29% over the past two quarters in FY25, following regulatory action from October 24, calling this a significant tail risk for Groww’s business model.
Tail Risks For Groww’s Business Model
The fall in broking orders is a concern for Groww, as it relies heavily on brokerage revenue. Despite this, JM Financial believes that wealth and lending segments will scale quickly, and projects Groww’s revenue and PAT to grow at a CAGR of 34% and 45%, respectively, over FY26-FY28.
Groww’s strong post-listing performance is also worth noting. The stock was listed on November 12 at around Rs 112 on the NSE, accounting for a 12% premium over its IPO price of Rs 100. The stock surged to Rs 134 on debut before closing near Rs 131.
What Does This Mean For Indian Investors?
For Indian investors, the rally in Groww shares is a positive sign, but it’s essential to consider the risks flagged by JM Financial. The fall in broking orders is a concern, and investors should keep an eye on the company’s revenue and PAT growth. However, with a strong growth path and a user-friendly platform, Groww is an attractive option for investors looking to invest in the fintech space.
As the Indian stock market continues to evolve, it’s essential for investors to stay informed about the latest developments and trends. By following Indian stock market news and analysis, investors can make informed decisions and stay ahead of the curve.
Conclusion
In conclusion, the rally in Groww shares is a positive sign for the company, but investors should be aware of the risks flagged by JM Financial. With a strong growth path and a user-friendly platform, Groww is an attractive option for investors looking to invest in the fintech space. As the Indian stock market continues to evolve, it’s essential for investors to stay informed and make informed decisions.
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