Groww, India’s answer to Robinhood? Jefferies initiates stock coverage with Buy

Jefferies initiated coverage on Billionbrains Garage Ventures Ltd (Groww) with a 'Buy' rating, likening the platform’s rapid rise and product-led growth strategy to US trading app Robinhood. Despite launching only in FY21, Groww has already emerged as India’s largest broker by active clients, commanding a 26 per cent market share, well ahead of peers, the foreign brokerage said. 

Jefferies said Groww has multiple levers to deliver a 35 per cent earnings growth annually over FY26-28, driven by steady expansion in its core broking franchise, sharp scale-up in newer businesses and a meaningful margin uplift. Jefferies set a price target of Rs 180, valuing the stock at 33 times estimated December 2027 earnings per share (EPS), representing about a 15 per cent discount to Robinhood.

"Groww trades at 25x FY27e adj. EBITDA, a 50 per cent discount to Robinhood despite better growth. We think the discount is a function of higher regulatory risk to earnings in India relative to the US. Nonetheless, Robinhood has paid multiple fines to SEC in the last five years, with the company paying $45mn in January 2025. We expect the discount to narrow as Groww diversifies its revenues away from derivatives through scale up of MTF, wealth management and commodities," it said.

Jefferies attributed Groww’s market-share gains to its strong mutual fund funnel, intuitive user interface and powerful word-of-mouth adoption. It expected the broking business to grow at a 19 per cent CAGR, aided by improving client vintage and rising wallet share.

Drawing parallels with Robinhood, Jefferies highlighted Groww’s high product velocity as a key differentiator. Revenue is forecast to grow at a 29 per cent CAGR over FY26-28, supported by a sharp increase in client assets and cross-selling opportunities. The brokerage noted that client assets has risen 6-11 times over the past three years, while Groww expanded into margin trading, commodities, bonds, wealth management and loans against securities.

"Robinhood has expanded into multiple products besides investments including credit cards, retirement accounts and crypt wallets. Hence, we expect Groww to expand its products, services & features as well. We see unlisted shares, distribution of insurance savings products, credit cards & subscription based advisory models as key opportunities. While life insurance savings, unlisted shares & credit cards could take time, subscription based advisory model could happen sooner considering Groww's growing share of affluent clients (assets >Rs2.5mn) who may need more support," Jefferies said.

Jefferies estimated that newer businesses could contribute around 20 per cent of revenues by FY28, compared with just 1 per cent in FY25, led primarily by margin trading and wealth management. The wealth business alone was valued at Rs 3,800 crore, assuming a 30 per cent revenue CAGR and gradual improvement in cost efficiency.

On profitability, Jefferies said adjusted Ebitda margins has already expanded from 36 per cent in FY23 to 59 per cent in FY25, exceeding both Robinhood and domestic peer Angel One. While margins were expected to soften in FY26 due to weaker broking revenues and near-term investments in wealth management, Jefferies forecast a 700-basis-point rebound from FY27 onwards as new products scaled and average revenue per user increased.

Technology remained central to Groww’s strategy, with Jefferies noting that the company relied largely on in-house development and spent about 11 per cent of operating revenue on technology, well above most fintech peers.

Jefferies also flagged a shift within Groww’s NBFC arm, which had begun moving away from riskier personal loans towards secured loans against securities to address elevated credit costs seen in FY25.

Overall, Jefferies said Groww’s ability to scale new revenue streams would be key to narrowing its valuation gap with Robinhood. While the stock traded at a 30 per cent discount despite superior growth and margins, successful execution in margin trading and wealth management could drive a re-rating. Key risks cited included regulatory changes, intensifying competition and cyber-security threats.