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Groww: India's Robinhood banks on 26% upside
19 Dec
Summary
- Groww holds ₹1.13 lakh crore in mutual funds, generating zero revenue.
- Jefferies projects new services to boost revenue to 20% by FY28.
- 45% of Groww's clients are under 30, showing significant future growth.
Global brokerage Jefferies has initiated coverage on Groww with a 'Buy' rating and a target price of Rs 180, indicating a 26% potential profit. Groww, despite being India's largest broker by active users, faces a substantial revenue gap, with nearly half of its ₹1.13 lakh crore in mutual fund assets generating no income. Jefferies expects Groww to emulate Robinhood's strategy of rapidly introducing new revenue streams.
The brokerage anticipates that new offerings, including Margin Trading Facility and commodity trading, will grow to contribute 20% of total revenue by FY28, up from a mere 1% in FY25. Furthermore, Groww's acquisition of Fisdom signals a move into professional wealth management, aiming to manage 10% of client assets by FY30. This strategic pivot targets the significant untapped value within its existing user base.
With 45% of its clients under 30, Groww has captured a young demographic poised for wealth accumulation. Jefferies projects a 35% CAGR in earnings per share through FY28, driven by this aggressive expansion and the increasing value of its young user base over time. The firm also notes Groww's shift towards secured lending, anticipating it to form 45% of the loan book by FY30.
