Groww Explained: From valuations to projections, here's what numbers tell us

The listing of Billionbrains Garage Ventures Ltd., parent company of the trading platform Groww, its subsequent rally and the fall on Wednesday has been much talked about on Dalal Street. At the intraday high of ₹193 on Tuesday, the trading platform was valued at over ₹1.15 lakh crore, higher than all of its peer companies, and even the Bombay Stock Exchange (BSE).

But how do Groww's valuations stack up for investors to analyse? Lets help you answer this question using two scenarios:

Understanding PEG: A Tool to Value Growth Companies

When evaluating high-growth companies like Groww, the traditional P/E ratio doesn't tell the full story. This is where the PEG ratio, or Price-to-Earnings-to-Growth, becomes useful.

PEG divides a company's P/E ratio by its expected earnings growth rate. The benchmark is straightforward: a PEG of 1.0 is considered fair value. A PEG above 1.0 suggests the stock may be overvalued relative to its growth prospects, while below 1.0 indicates potential undervaluation.

Scenario 1: The Management Base Case

In interactions with CNBC-TV18, the management of Groww has guided for the company's revenue to grow between 25% to 30% and costs to rise between 15% to 20% over the next few years.

In financial year 2025, Groww had reported a revenue of ₹3,902 crore and a net profit of ₹1,824 crore. Assuming the higher end of the revenue guidance and the lower end of the cost guidance, here's how the numbers work out:

Metric	FY25	FY30 Est.	CAGR (%)
Revenue (₹ Crore)	3,902	14,487	30
Net Profit (₹ Crore)	1,824	8,586	36

In case this scenario plays out as projected, Groww's price-to-earnings-growth-ratio works out to be 1.64. This indicates that even at the higher end of the management guidance, the current valuation would mean that investors are paying a premium to the relative growth being delivered.

Scenario 2: The Opportunity In ARPU Expansion

There's a second narrative that offers more upside potential. Currently, Groww generates ₹3,025 in revenue per NSE active client. Compare this to Angel One, which earns an implied ₹6,893 per client, more than double.

This gap exists because Angel One has successfully built out wealth management and advisory services for high-net-worth clients. They've also expanded into commodities trading and bonds, creating multiple revenue streams. Groww is pursuing a similar strategy through its MTF book, Fisdom, Platform 915, commodities trading, and bond offerings, which represent cross-selling opportunities with their existing user base.

If Groww can narrow this gap by doubling ARPU to match Angel One's levels, growing its user base at 16 percent CAGR (aligned with broader wealth management TAM growth), and expanding margins to 80 percent, the financial profile changes meaningfully:

Metric	FY30	CAGR (%)
Revenue (₹ Crore)	18,675	37
Net Profit (₹ Crore)	11,603	43

This scenario yields a PEG ratio of approximately 1.35. While this reflects stronger execution and market tailwinds, it still implies a valuation at a premium to traditional growth company benchmarks.

A PEG ratio above 1.0 in both scenarios suggests the market is already pricing in strong execution. This leaves limited room for disappointment. If growth comes in at the midpoint of guidance rather than the high end, or if ARPU expansion faces headwinds, there could be potential valuation adjustments.

The Liquidity Factor

Groww currently has very little free float in the market. Only 7.2% of the company's outstanding is trading currently. The rest are held by founders, early investors, and employees under lock-in arrangements.

Lock-in period for 50% of the anchor investor shares ends on December 9, 2025. It must be specified that the end of the lock-in period does not mean all the shares will be sold in the market, but they only get eligible to be traded, enabling better price discovery. According to Nuvama Alternative and Quantitative Research, as many as 141.2 million shares will become eligible to trade once this lock-in period ends.

The lack of free float is evident in this stat: Groww saw shares worth ₹8,680 crore trade on Tuesday, which is higher than the free-float market capitalization of ₹8,430 crore.

Shares of Groww ended 10% lower at ₹169.89.