Groww shares: Buy Billionbrains Garage Ventures for 19% upside, says MOFSL

MOFSL on Tuesday initiated coverage on Billionbrains Garage Ventures Ltd (Groww) with a 'Buy' rating, citing strong operating leverage, diversified growth levers and a structurally efficient cost model that underpinned robust margin expansion potential. The brokerage set a one-year target price of Rs 185 apiece, valuing the company at 28 times FY28E earnings. The target price suggests 19 per cent potential upside. 

MOFSL said a large part of Groww’s cost base is fixed, with only 9-10 per cent of costs variable, which has supported a healthy operating margin of 59 per cent in FY25. The brokerage noted that cost to serve, comprising technology and transaction-related expenses, had remained in the 12-14 per cent range of operating revenue despite continued investments to enhance platform capabilities. 

With most major investments already in place, MOFSL expects these costs to grow at a 13 per cent CAGR over FY25–28, pushing contribution margins closer to 90 per cent over time.

MOFSL highlighted that Groww’s organically built customer acquisition funnel and steady product expansion had resulted in low customer acquisition costs of $6-10 and short payback periods, reflecting significant scale efficiencies. Marketing expenses were expected to rise at an 11 per cent CAGR over FY25-28, in line with a gradually expanding transacting user base. 

Employee expenses, which formed the bulk of operating costs, are projected to grow at a 27 per cent CAGR over the same period. Supported by sustained broking momentum, scaling non-broking revenues and tight cost discipline, MOFSL expects Ebitda margins to expand meaningfully to 66.4 per cent by FY28.

From a business perspective, MOFSL said Groww had rapidly scaled to become India’s largest retail broking platform on the NSE active clients metric within four years of launch, with a market share of 26.8 per cent as of November 2025, around 9 percentage points higher than the second-largest player. While the platform began as a zero-commission mutual fund distributor, it had evolved into a full-stack investment ecosystem spanning equities, derivatives, commodities, margin trading facility, credit and wealth management. Groww commanded market shares of about 25.8 per cent in cash equities and 17.3 per cent in derivatives, despite recent regulatory headwinds.

MOFSL noted that Groww ended the first half of FY26 with 1.48 crore active users across products and had delivered nearly threefold revenue growth between FY23 and FY25. The brokerage expected revenues to double again over FY25-28, driven by multiple optional growth levers that were gradually reducing dependence on volatile broking income. It projected the broking contribution to revenue to decline to 67 per cent by FY28 from 85 per cent in FY25, improving earnings quality and resilience.

The brokerage said over 80 per cent of Groww’s customers were acquired organically, keeping acquisition costs low, while the fully in-house technology stack reduced cost to serve and enabled rapid product deployment with high platform uptime. As incremental revenues scaled across new businesses and fixed costs remained largely stable, MOFSL expects Ebitda margins to expand to around 66 per cent by FY28 from 59 per cent in FY25.

On individual segments, MOFSL said Groww’s cash equity market share remained strong at 25.8 per cent, while derivatives market share had risen to 17.3 per cent despite regulatory actions in FY25. The brokerage noted that a recent increase in minimum brokerage to Rs 5 from Rs 2 had not slowed active user growth, indicating price inelasticity and providing a lever to offset future regulatory impacts. While broking’s share of revenue was expected to decline, absolute broking revenue was projected to grow at a 16 per cent CAGR over FY25–28.

MOFSL highlighted margin trading as a key monetisation driver, noting that Groww’s MTF book had reached Rs 1,700 crore but still represented only around 2 per cent market share. With yields of about 15 per cent and brokerage of 0.1 per cent of order value, MTF adoption is expected to lift cash yields, drive ARPU expansion and attract new users. MOFSL expected MTF revenue contribution to rise to about 12 per cent by FY28 from 1 per cent in FY25. Commodities trading and new tools aimed at active traders are also expected to deepen engagement and monetisation.

The brokerage said Groww’s affluent customer base had grown roughly twice as fast as the overall platform, with about 0.3 million affluent users accounting for around one-third of assets. This, coupled with the acquisition of wealth platform Fisdom, positioned Groww well to scale a technology-driven wealth management business spanning mutual fund advisory, PMS, AIFs, private equity and unlisted securities. MOFSL expected wealth management to contribute around 7 per cent of revenue by FY28.

MOFSL also flagged credit as an emerging synergy, noting that Groww hosted assets worth about $30 billion on its platform, creating a sizeable opportunity for loans against securities and mutual funds. These products are expected to enhance ARPU and profitability with minimal incremental acquisition costs. The brokerage projected credit revenues to grow at a 30 per cent CAGR over FY25–28, supported by strong uptake in LAS and LAMF products, particularly among affluent customers.

Despite regulatory action in the F&O segment toward the end of FY25, MOFSL expects Groww to deliver earnings growth of 10 per cent in FY26, followed by stronger growth of 50 per cent in FY27 and 32 per cent in FY28. Overall, it forecast FY25–28 revenue, Ebitda and PAT CAGRs of 25 per cent, 30 per cent and 30 per cent, respectively. MOFSL said the company’s tech-led, customer-centric model provided a lean cost structure and supported sustained margin expansion.

On valuation, MOFSL noted that Groww traded at about 22 times FY28E earnings, at a meaningful discount to global peers such as Robinhood, which is valued at about 40 times CY27E earnings. As Groww’s revenue mix diversified beyond broking into MTF, credit and wealth management, the brokerage expected this valuation gap to narrow over time.