Groww shares can jump 67% by FY28, says Motilal Oswal's 'bull case' projection

Brokerage firm Motilal Oswal has initiated coverage on Billionbrains Garage Ventures Ltd., the parent company of discount broking platform Groww in its latest note on Tuesday, January 6.

Motilal Oswal initiated coverage with a "buy" rating and a price target of ₹185 per share, which implies a potential upside of 19% from Monday's closing levels.

For its bull case, Motilal Oswal has a price target of ₹260 by financial year 2028, which is implying a potential upside of 67% from Monday's close.

The brokerage wrote in its note that Groww has scaled rapidly to become India's largest retail broking platform on an active client basis within four years of launching. Its market share of 26.8% in November, which is 9% higher than the second-largest player.

Groww has evolved into a full-stake investment platform spanning across verticals, from broking to commodities and even wealth management.

Motilal Oswal stated that Groww is increasing building optional growth levers to diversify revenues and improve earnings quality. The rapid expansion of MTF, a fast-growing commodity franchise, entry into wealth management will all collectively reduce the dependance on the volatile broking segment, Motilal Oswal said, adding that it expects broking segment revenue contribution to drop to 67% in financial year 2028 from 85% currently.

"As incremental revenue scales across new businesses and fixed costs remain largely stable, we expect Groww's EBITDA margin to expand to 66% by financial year 2028 from 59% currently," the Motilal Oswal note stated.

The brokerage said that Groww is well-positioned to compound earnings in a structurally underpenetrated Indian Capital markets ecosystem. Rising cash yields, product depth in non-derivative segments and monetization levers targeting the affluent customer through the wealth management platform should reduce earnings volatility, Motilal Oswal added.

Groww's revenue may grow at a Compounded Annual Growth Rate (CAGR) of 25% over financial year 2025-2028, while its EBITDA and Profit After Tax (PAT) may grow at a 30% CAGR each during the same timeframe, Motilal Oswal said.

The base case price target of ₹185 values the stock at 28 times its estimated financial year 2028 price-to-earnings, which is a discount of nearly 30% to its US-peer Robinhood.

For its bull case, Motilal Oswal assumes an operating revenue CAGR of 33% versus the base case assumption of 25%, while EBITDA CAGR for the next three years could by 36%, with a 68% margin.

This is the second "buy" recommendation that shares of Groww have received, after Jefferies initiated coverage last month.

Shares of Groww ended little changed at ₹155 on Monday, still 55% above its issue price of ₹100, but down 20% from its post-listing high of ₹193.