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Groww Stock Sinks as Lock-in Expires
Groww's six-month IPO lock-in period ended on May 12, 2026. This led to major investors like YC Holdings, Ribbit Capital, Peak XV Partners, and Sequoia Capital selling shares worth about Rs 5,326 crore. Groww's stock fell sharply, hitting intraday lows of ₹182 and closing down 5.4% at ₹183.09. The stock was already down 22% from its 52-week high of ₹227.20.
Despite reporting a more than double net profit of ₹686 crore for Q4 FY26 and an 81% rise in total income, investors focused on Groww's high valuation. Its trailing twelve-month price-to-earnings (TTM P/E) ratio is between 62.70x and 115x. This compares to competitors like Angel One, trading at a P/E of 22x-32x, and private company Zerodha, which has a lower valuation.
Analysts generally hold a positive long-term view, with an average target of ₹235. However, caution is advised due to nearly 418.2 crore pre-IPO shares, worth ₹81,000 crore, set to be released.
Fedbank Financial Services Sees Institutional Shift
Fedbank Financial Services saw a significant ownership change on May 12, 2026. True North Fund VI LLP sold its entire 6.86% stake to Nomura India Equity Fund for ₹385.4 crore. The transaction, at ₹150 per share, saw Fedbank's stock rise 1.86% to ₹149.51 that day. Nomura is now a major shareholder in this Non-Banking Financial Company (NBFC).
Fedbank reported strong Q4 FY26 results, with net profit up 40.3% year-on-year to ₹100.5 crore. Net total income increased 17.5% to ₹378 crore. For FY2025, the company's profit after tax (PAT) was ₹343.6 crore, a 53% rise YoY.
Fedbank has a market capitalization around ₹5,600 crore and a trailing twelve-month P/E ratio of about 16.58x, classifying it as a small-cap stock. Analysts are largely positive, with a consensus 'Strong Buy' rating and an average 12-month price target of ₹181.50, suggesting potential upside of over 23%.
However, the company's loan portfolio is relatively new. While overall gross non-performing assets (GNPA) are stable, they could face future challenges as the loan book matures.
Sector Challenges: Valuation Risks and Portfolio Concerns
Groww's main issue is its high valuation, which seems out of step with competitors, both public and private. The fintech sector, despite expected growth, is seeing fewer, bigger deals. This shows investors are more selective, preferring proven profitability over rapid growth at any price.
Intense competition and reliance on volatile income sources, like futures and options (73% of FY25 income), present risks. The possibility of more selling pressure after the lock-in expiry also looms, potentially creating a supply overhang.
Fedbank, despite steady growth and positive analyst ratings, faces its own structural challenges. Its operations are moderately sized, and its rapidly growing loan portfolio is still new. This presents risks, especially during different economic cycles.
Fedbank's price-to-book ratio is higher than its peers, partly due to its return on equity. However, this leaves little room for error. High debt levels, though expected to stay below 6.5 times, mean it operates with a leveraged financial structure within the NBFC sector.
Outlook: Divergent Paths for Fintech and NBFCs
Groww's future depends on maintaining market share amid competition and managing its high valuation. Most analysts are constructive, expecting upside from its expanding wealth platform and user growth. The Indian wealth-tech market is poised for growth, but Groww must navigate regulatory changes and prove consistent profitability across its services.
Fedbank, supported by Federal Bank, is set for steady growth in the NBFC sector. 'Strong Buy' ratings and price targets near ₹181.50 indicate ongoing investor confidence, provided it maintains loan quality and manages its growing loan book well. The NBFC sector also faces evolving regulations that will require continuous adaptation and strong risk management.