Groww shares can rise another 20% despite post-listing jump, Kotak projects
Kotak Institutional Equities initiated coverage on Groww with a 'Buy' rating and ₹190 price target, joining Motilal Oswal and Jefferies in positive recommendations. The brokerage projects 35% EPS CAGR over FY26-28 driven by core broking growth and expansion in newer business segments. Despite recent volatility, the stock remains up 59% from its ₹100 issue price, though JM Financial maintains a contrarian 'Sell' view citing valuation concerns.
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Kotak Institutional Equities has initiated coverage on Billionbrains Garage Ventures Ltd., the parent company of discount broking platform Groww , with optimistic projections for the stock's future performance. The brokerage issued a 'Buy' recommendation on Monday, January 12, setting a price target that suggests significant upside potential for investors.
Analyst Recommendations and Price Targets
Kotak's coverage initiation comes with a price target of ₹190.00 per share, representing a potential upside of 20% from Friday's closing levels. This positive outlook is built on the brokerage's constructive medium-term view anchored in several key factors including a durable, product-led growth flywheel, expanding monetisation opportunities, and robust technological infrastructure.
| Brokerage | Rating | Price Target | Recommendation Date |
|---|---|---|---|
| Kotak Institutional Equities | Buy | ₹190.00 | January 12 |
| Motilal Oswal | Buy | ₹185.00 | Previous week |
| Jefferies | Buy | ₹180.00 | December 2025 |
| JM Financial | Sell | ₹144.00 | December |
Market Position and Growth Prospects
Groww has achieved a remarkable market position, becoming India's largest broker in terms of active clients despite commencing operations only in FY21. This rapid growth trajectory has caught the attention of multiple research houses, with Jefferies valuing the company at a premium to peer Angel One. The premium valuation is justified by faster growth rates, superior margins, and lower exposure to the volatile futures and options segment.
Financial Projections and Business Expansion
The earnings outlook for Groww appears robust, with projections indicating a 35% EPS CAGR over FY26-28. This growth is expected to be driven by multiple factors:
- Core broking business growth of approximately 19%, supported by client vintage and market share gains
- Five-fold expansion in newer initiatives including margin trading facilities and wealth management services
- Significant margin expansion of nearly 700 basis points
- Diversified monetisation across broking, margin lending, wealth management, and consumer credit segments
Stock Performance and Market Reception
Shares of Groww closed nearly 1% lower at ₹158.90 on Friday, reflecting some near-term volatility. However, the stock maintains substantial gains of about 59% from its issue price of ₹100.00, though it has retreated approximately 18% from its post-listing high of ₹193.00. The mixed analyst sentiment, with three 'Buy' ratings against one 'Sell' recommendation, reflects differing views on valuation metrics for the broking business model.
Investment Considerations
While the majority of analyst coverage remains positive, JM Financial's contrarian 'Sell' rating highlights concerns about stretched valuations in the broking sector. The firm's ₹144.00 price target suggests potential downside risk, arguing that current market pricing may not adequately reflect the cyclical nature of broking businesses. Investors are advised to consider these varying perspectives and conduct thorough due diligence before making investment decisions.
Historical Stock Returns for Groww
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +0.50% | +2.94% | +6.90% | +21.65% | +21.65% | +21.65% |
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