This stock hits record high; surges 105% above IPO price — what's fueling the rally; is it still a buy or time to book profits?

Shares of Billionbrains Garage Ventures Ltd, the parent company of fintech platform Groww, slipped during Thursday's afternoon trade, pausing their sharp five-session record run. The stock, which touched an all-time high of Rs 214 in early deals, was last seen trading 1.80 per cent lower at Rs 204.75. Even at this level, it has surged 104.75 per cent from its initial public offering (IPO) price (upper band) of Rs 100. The counter had debuted on November 12 last year.

The sharp rally comes after BofA Securities has initiated coverage on the stock with a 'Buy' rating and a price target of Rs 235, citing robust profitability and operating leverage.

"Groww has one of the highest profit margins among peers, EBIDTA/PAT margin of 61 per cent/47 per cent in FY25. Given a largely fixed-cost, scalable platform model, we see meaningful scope for further margin expansion. We expect EBITDA/PAT margin to expand to 67 per cent/52 per cent by FY28E, driven by operating leverage and deepening product penetration. We estimate EPS growth of 35 per cent CAGR over the next two years," the global brokerage stated.

"We initiate coverage on Groww with a Buy rating and PO (price objective) of Rs 235. Our valuation is based on a 39x FY28E P/E, anchored to the average 2-year fwd P/E of listed consumer fintech peers, reflecting Groww's scalable platform model and tech-first approach. This implies ~ 70 per cent premium to traditional wealth and broking peers," BofA added.

Last month, JPMorgan had also initiated coverage on Groww with an 'Overweight' rating and a price target of Rs 210 per share, further reinforcing positive sentiment around the stock.

However, an analyst flagged elevated valuations and the cyclical nature of the broking business as key risks at current levels.

Kranthi Bathini, Equity Strategist at WealthMills Securities, said, "The stock has been outperforming, but valuations are still high, so one needs to be slightly cautious. As stock broking is a cyclical business, investors should understand this cyclicality in the financial services space. They can consider booking some partial profits in the short to medium term."

From a technical perspective, the stock remains in a strong uptrend, although near-term caution persists.

Osho Krishan, Senior Analyst – Technical & Derivative Research at Angel One, noted, "Groww has witnessed a strong bullish breakout following a period of consolidation in the Rs 150–170 range. On the downside, the Rs 190–180 range is expected to provide intermediate support, while the Rs 170–165 zone remains a critical and sacrosanct support area in the near term. Maintaining these levels will be key for sustaining the current bullish trajectory."

According to AR Ramachandran, a Sebi-registered research analyst at Tips2trades, "The stock is bullish and also overbought on daily charts with the next resistance at Rs 219. Investors should book profits at current levels as a daily close below the support of Rs 195 could trigger a fall towards Rs 167 in the near term."

Ravi Singh, Chief Research Officer at Mastertrust, stated that immediate resistance on the counter lies at Rs 220, while support is placed at Rs 195.

Groww is currently the largest broker in terms of active clients, commanding around a 28 per cent market share, compared with about 15 per cent for the second-largest player.