Brokerage firm Jefferies initiates Groww at 'buy'; stock jumps 12%

Shares of Groww operator Billionbrains Garage Ventures jumped 12 per cent on Friday after Jefferies initiated coverage on the investment platform with a ‘Buy’ rating, citing its rapid rise and strong earnings growth visibility. Shares of the company ended at ₹161, up ₹17, or 11.8 per cent. At the last close, the country’s largest broker was valued at ₹99,426 crore.

 

The brokerage firm has set a price target of ₹180, implying an upside of about 12 per cent from current levels. Shares of Groww are already up 61 per cent over their IPO price.

 

Jefferies expects Groww’s earnings per share to grow at a compounded annual rate of 35 per cent between financial year 2026 (FY26) and FY28, driven by three key levers: steady growth in the core broking business, sharp expansion in new revenue streams, such as margin trading facility (MTF) and wealth management, and margin expansion of around 700 basis points from FY26 levels. 

The brokerage sees Groww’s revenues growing at a 29 per cent CAGR over FY26-28, aided by what it describes as a “product velocity” strategy similar to that of US-based Robinhood.

 

On profitability, Jefferies highlighted that Groww’s adjusted EBITDA margins have already expanded from 36 per cent in FY23 to about 59 per cent in FY25, surpassing both Angel One and Robinhood. While margins may moderate in FY26, due to investments in wealth management, the brokerage expects them to expand to nearly 67 per cent by FY28 as scale benefits kick in.

 

Groww trades at 27 times its estimated earnings for December 2027, 30 per cent discount to global peer Robinhood, Jefferies noted. The platform deserves a premium valuation over domestic rivals such as Angel One, on the back of higher growth, better margins, and lower dependence on derivatives trading, according to the brokerage.

 

In the broking segment, it is already a market leader in terms of active clients, commanding a 26 per cent market share — well ahead of its nearest peer at 16 per cent.

 

The firm attributed Groww’s scale-up to its mutual fund-led customer acquisition funnel, user-friendly interface, and strong word-of-mouth referrals.

 

Groww has been expanding beyond equity broking into commodities, bonds, margin trading, loans against securities, and wealth management. Jefferies expects these new businesses to contribute about 20 per cent of total revenues by FY28 versus just 1 per cent in FY25.

 

A key earnings catalyst, according to the report, is the monetisation of Groww’s large mutual fund client base. Nearly half of client assets on the platform are currently held in mutual funds, which do not generate direct revenue. The launch of advisory and wealth management offerings is expected to lift its average revenue per user as clients mature and adopt more products.

 

The key risks flagged by Jefferies include regulatory changes, rising competition, and cybersecurity threats.