Stock: Billionbrains Garage Ventures (Groww)

Brokerage Action: Initiated Coverage with BUY

Target Price: ₹180

The Indian fintech sector received a massive vote of confidence this week as global brokerage giant Jefferies initiated coverage on Groww (listed as Billionbrains Garage Ventures) with a ‘Buy’ rating.

The brokerage has set a target price of ₹180, implying a significant upside from its recent trading levels. Following the release of the report on December 19, Groww shares rallied sharply, signaling that the market is paying close attention to what Jefferies calls the “Indian Robinhood.”

Here is a breakdown of the report and why analysts are betting big on Groww’s future.

1. The “Robinhood” Playbook

The core thesis of the Jefferies report is the striking similarity between Groww and the US-based trading giant, Robinhood.

Groww has already won the battle for users, commanding a 26% market share in active clients—beating out traditional incumbents. However, the real story is “Product Velocity.” Just as Robinhood expanded from simple stock trading to retirement accounts and credit cards to increase revenue, Groww is rapidly evolving into a “Financial Supermarket.”

• Young Demographics: 45% of Groww’s clients are under the age of 30.
• The Strategy: As these young investors enter their prime earning years, Groww plans to cross-sell high-margin products like Margin Trading Facility (MTF), Wealth Management, and Loans Against Securities.

2. Unlocking the “Zero-Revenue” Goldmine

One of the most interesting takeaways from the report is how Jefferies views Groww’s mutual fund business.

Currently, a massive ₹1.13 lakh crore of client assets on Groww are held in direct mutual funds. Because these are “direct” funds, they generate almost zero revenue for the platform.

Jefferies views this not as a weakness, but as a massive “zero-cost customer acquisition” funnel. Groww has acquired millions of users for free. By converting even a small fraction of these free users into paying customers for other services (like F&O, credit, or advisory), Groww can unlock exponential revenue growth without the heavy marketing spend that competitors face.

3. Financial Projections: 35% EPS Growth

The report forecasts a robust financial trajectory for the company over the next three years (FY26–FY28):

• EPS Growth: Projected 35% CAGR (Compound Annual Growth Rate).
• Revenue Growth: Projected 29% CAGR.
• New Revenue Streams: Revenue from new initiatives (like MTF and Credit) is expected to jump from less than 1% in FY25 to 20% by FY28.

The Tech Moat: Jefferies highlighted that Groww spends roughly 11% of its revenue on technology, which is nearly double the industry average of 5%. Because Groww builds its tech stack in-house (unlike competitors who often rely on third-party vendors), it can innovate faster and scale more efficiently.

4. Valuation: Cheap or Expensive?

At the target price of ₹180, Jefferies values Groww at roughly 33x its estimated Dec-2027 earnings.

• Vs. Robinhood: Groww trades at a 15–30% discount to its US peer, Robinhood.
• Vs. Angel One: Groww commands a premium over domestic rival Angel One. Jefferies justifies this premium because Groww is less dependent on the volatile Futures & Options (F&O) segment and has higher growth potential in secured lending and wealth management.

The Risks to Watch

While the outlook is bullish, investors should remain aware of key risks cited in the report:

• Regulatory Changes: Any new SEBI curbs on retail trading or F&O volumes could impact short-term revenues.
• Competition: The entry of deep-pocketed players like Jio BlackRock could disrupt the asset management space.

The Verdict

The Jefferies initiation note suggests that Groww has completed the hard task: “occupying the land” (acquiring a massive user base). Now, it is ready to “build the city” (monetize that base).

With a shift toward secured lending, wealth management, and a sticky ecosystem, Groww is positioning itself as the dominant financial app for the next generation of Indian investors. The path to ₹180 relies on how well they execute this transition over the coming quarters.