Why did Motilal Oswal start coverage on Groww with 'Buy' rating? Check here

Domestic brokerage Motilal Oswal Financial Services has initiated coverage on Billionbrains Garage Ventures, which operates the Groww platform, with a ‘Buy’ rating and a one-year target price of ₹185, implying a potential upside of about 19 per cent from current levels. The brokerage believes Groww is well-placed to compound earnings in India’s underpenetrated capital markets, supported by rapid scale-up, strong operating leverage and multiple new growth levers beyond core broking.

 

In a note authored by Prayesh Jain, Nitin Aggarwal, Kartikeya Mohata and Muskan Chopra, Motilal Oswal said Groww has “scaled rapidly to emerge as the largest retail broking platform” in India within nearly four years of launch, based on NSE active clients. As of November 2025, Groww commanded a 26.8 per cent market share, around nine percentage points higher than the second-largest player.

 

On the bourses, Billionbrains Garage Ventures’ share price climbed as much as 2.7 per cent to an intraday high of ₹159.75 before paring gains to trade 0.26 per cent lower at ₹155.15 around 11:30 AM. By comparison, the BSE Sensex was down 0.54 per cent at 84,976.62.  CATCH STOCK MARKET UPDATES TODAY LIVE

Rapid scale-up and strong market share gains

 

Originally launched as a zero-revenue mutual fund distribution platform, Groww has evolved into a full-stack investment ecosystem spanning equities, derivatives, commodities, margin trading facility (MTF), credit products and wealth management. By the end of the first half of FY26, the platform had 14.8 million active users across products, with meaningful market shares in stocks (about 25.8 per cent) and derivatives (about 17.3 per cent).

 

Motilal Oswal highlighted that Groww’s strong product adoption has driven a sharp financial scale-up, with revenue nearly tripling between FY23 and FY25. The brokerage expects this momentum to continue, forecasting revenue to double over FY25-28, supported by both broking growth and diversification into non-broking streams. Over FY25-28, the brokerage estimates Groww’s revenue, Ebitda and PAT CAGR at 25 per cent, 30 per cent and 30 per cent, respectively.

Diversification beyond broking to drive resilient earnings

 

A key element of the investment thesis is Groww’s effort to reduce reliance on the more volatile broking segment. According to the note, the contribution of broking revenue is expected to decline to 67 per cent by FY28 from 85 per cent in FY25, as newer businesses such as MTF, commodities, credit and wealth management scale up. This shift, Motilal Oswal said, should result in “a structurally more resilient earnings profile”.

 

The MTF business, which currently has a loan book of around Rs 17 billion, remains a small but fast-growing opportunity, with market share of about 2 per cent. Groww aims to expand this into double digits over time. With yields of roughly 15 per cent and additional brokerage income, MTF is expected to materially improve cash yields and ARPU, with its revenue contribution projected to rise to 12 per cent by FY28 from 1 per cent in FY25.  ALSO READ | IndusInd Bank shares rise to highest in 9 months post Q3 business update 

Groww has also recently entered commodities broking, which Motilal Oswal expects to add incremental revenue. Despite an increase in minimum brokerage to ₹5 from ₹2, active users in the cash segment have continued to rise, indicating pricing inelasticity and providing a potential buffer against regulatory or volume-related headwinds.

Wealth management and credit emerge as key growth pillars

 

Another important growth pillar is wealth management. Motilal Oswal noted that Groww’s affluent customer base has expanded nearly twice as fast as the overall platform, with around 0.3 million affluent users controlling about one-third of assets. The acquisition of Fisdom strengthens Groww’s push into tech-led wealth management, covering products such as mutual fund advisory, PMS, AIFs, private equity and unlisted securities. The brokerage expects wealth management to contribute around 7 per cent of revenue by FY28.

 

In credit, Groww is leveraging its sizable asset base, around $30 billion of assets on platform, to scale loan-against-securities (LAS) and loan-against-mutual-funds (LAMF). These products, along with MTF, are seen as natural adjacencies that enhance ARPU and engagement while keeping acquisition costs low. Motilal Oswal expects credit revenue to grow at a 30 per cent CAGR over FY25-28.  ALSO READ | RIL shares drop 5%, log steepest drop in 8 months after hitting a high

Operating leverage, valuation and key risks

 

Operational efficiency remains a core strength. With more than 80 per cent customer acquisition coming organically, Groww maintains a low customer acquisition cost and short payback periods. A largely fixed cost base, only 9-10 per cent variable, has already driven an operating margin of 59 per cent in FY25, which Motilal Oswal expects to expand to 66.4 per cent by FY28 as incremental revenues scale faster than costs.

 

On valuation, Motilal Oswal said Groww trades at around 22x FY28E P/E, a meaningful discount to global peers such as Robinhood. As revenue diversification improves and non-broking segments scale up, the brokerage expects this valuation gap to narrow over time. While regulatory changes in F&O and rising competition remain risks, Motilal Oswal believes Groww’s tech-first, customer-centric model and expanding product suite underpin its long-term growth potential, justifying the positive initiation.

 

 

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