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Motilal Oswal Flags 67% Upside for Groww
Brokerage house Motilal Oswal has initiated coverage on Groww, the parent entity Billionbrains Garage Ventures Ltd., with a strong 'buy' recommendation and ambitious price targets. The firm's optimistic outlook sees shares potentially climbing to ₹260 by fiscal year 2028 under a bull case scenario, signaling a substantial 67% jump from current levels.
Market Dominance and Diversification Strategy
Groww has rapidly ascended to become India's premier retail broking platform, commanding a 26.8% market share in November. This expansion has seen the company evolve beyond just broking to encompass commodities and wealth management. Motilal Oswal highlights Groww's strategic moves to diversify revenue streams, anticipating a reduction in broking's revenue contribution from 85% to 67% by FY28.
Margin Expansion and Earnings Growth
The brokerage forecasts significant operational improvements, with EBITDA margins expected to widen to 66% by FY28 from the current 59%. Motilal Oswal projects revenue to grow at a compounded annual growth rate (CAGR) of 25% between FY25 and FY28, with EBITDA and Profit After Tax (PAT) each expected to expand at a 30% CAGR during the same period. The base case target of ₹185 values the stock at 28 times its FY28 estimated P/E.
Strategic Positioning in Indian Markets
Motilal Oswal believes Groww is well-positioned to capitalize on the structurally underpenetrated Indian capital markets. The firm's analysis suggests that rising cash yields, expanded product offerings in non-derivative segments, and targeted wealth management services for affluent clients will help temper earnings volatility. This positive view aligns with a prior 'buy' call initiated by Jefferies last month.