Groww shares rebound 4% after Thursday's slump. Why are Jefferies, Motilal bullish on the stock?

Shares of Billionbrains Garage Ventures, the parent company of Groww, rebounded 4% to Rs 213.50 on Friday after tumbling 5% in the previous session. The stock remained in focus this week after the company reported a 94.44% year-on-year jump in Q1FY27 net profit to Rs 735 crore, compared with Rs 378 crore in the corresponding quarter last year.

Groww’s revenue from operations also witnessed a sharp uptick, rising 66% to Rs 1,504 crore from Rs 904 crore in the corresponding quarter of the previous financial year. On a sequential basis, Groww's revenue remained. Net profit for the quarter grew by 7% to Rs 735 crore from Rs 686 crore last year.

EBITDA for the quarter under review came in at Rs 971 crore, up 101% from Rs 483 crore in the year ago period. Sequentially, the increase was relatively modest, up 3% from Rs 939 crore, Groww’s investor presentation showed.

Groww shares: Buy, sell or hold after Q1 results

Jefferies maintained its positive stance on Groww with a target price of Rs 250, implying 21.3% upside. The brokerage believes the company is well positioned to benefit from the ongoing shift in household savings from traditional yield-based products to equity-linked investments.

It also highlighted Groww's product-agnostic platform, saying the addition of new products and services should help increase wallet share. Jefferies raised its FY27-FY29 EPS estimates by 1-6%, while the increase in the target price is largely due to the roll-forward of its valuation to September 2028. It noted that the stock is currently trading at 45x FY27E EPS, with an expected three-year EPS CAGR of 30%.

JM Financial has upgraded Groww to 'Buy' from 'Sell' and raised its target price to Rs 250 from Rs 170, citing stronger growth visibility and improving operating leverage. The brokerage said its confidence in the company's growth outlook has strengthened after Groww delivered a resilient performance despite a moderation in retail trading activity from the Q4FY26 peak.

Also read: Groww responds to Nithin Kamath tweet: Direct mutual funds remain free for DIY investors

It also highlighted expanding yields and better operating efficiency, with the cost-to-income ratio declining 3 percentage points quarter-on-quarter to 36%. Reflecting sustained market share gains and disciplined cost control, JM Financial has raised its FY27, FY28 and FY29 EPS estimates by 4%, 6% and 11%, respectively. It now values Groww at a 50% premium to Angel One, up from 20% earlier, supported by stronger earnings growth, higher margins and significantly larger client assets that improve customer stickiness.

Motilal Oswal reiterated its Buy rating on Groww with a revised target price of Rs 250. The brokerage expects the overall number of orders in the broking business to grow by more than 20% over FY27 and FY28, led by continued market share gains and improving revenue per order. It also believes that the MTF business, Loan Against Securities (LAS) and wealth management will provide an additional boost to the company's revenue growth.

Motilal raised its earnings estimates by 1% for FY27 and 3% for FY28, factoring in improved operating efficiency. The revised target price of Rs 250 is based on 38x FY28 estimated earnings per share (EPS).

Groww Q1 highlights

The company said it strengthened its market leadership across key segments during the June quarter by adding 115,000 net clients, supported by higher customer retention and improved product quality despite an industry-wide slowdown.

In mutual funds, it retained its position as India's largest distribution platform for direct mutual funds, with Rs. 1.9 lakh crore in direct mutual fund assets under management (AUM). SIP inflows grew 32% year-on-year, outpacing the industry's 16% growth.

Read more: Groww says it overtook Angel One in commodities trading within a year of launch

In the stock broking business, the company said risk control measures led to its retail ADTO market share easing sequentially to 15.1%, although it remained 3.3 percentage points higher year-on-year. In commodity derivatives, it expanded its retail market share to 28.6% in notional ADTO across MCX and NSE.

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