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Groww Shares Surge 4% on Positive Brokerage Commentary Post Q3 Results
Should You Buy, Sell, or Hold?
Shares of Billionbrains Garage Ventures, the parent company of the stockbroking platform Groww, surged by 4% to an intraday high of ₹170.95 on the BSE on Friday, January 16. This surge comes on the heels of positive brokerage commentary, despite the company reporting a 27.8% year-on-year decline in consolidated net profit for Q3 FY26.
Key Financial Highlights
– Net Profit Drop: Profit fell to ₹546.93 crore from ₹757.11 crore in the corresponding quarter last year due to a one-time tax-adjusted gain of ₹315 crore in Q3 FY25.
– Operating PAT Growth: Operating Profit After Tax (PAT) increased by 24% to ₹546.93 crore from ₹442 crore.
– Revenue Growth: Revenue from operations rose by 24.8% year-on-year to ₹1,216.07 crore, compared to ₹974.53 crore in FY25’s corresponding quarter.
– Standalone Net Profit Decline: Standalone net profit declined by 36.7% YoY to ₹428.45 crore from ₹677.46 crore.
– Market Share Expansion:
– Market share in stock trading jumped to 28.8% from 21.6% year-on-year.
– Share in equity derivatives increased to 18.1% from 12.2%.
– Turnover Growth:
– Average daily turnover in retail cash segment grew by 21% to ₹11,331 crore.
– Retail derivatives turnover surged by 45% to ₹11,483 crore.
Mutual Fund Segment Performance
– SIP Inflows: Increased by 30% YoY to ₹12,328 crore in Q3 FY26 from ₹9,476 crore in Q3 FY25.
– Improved Market Share: Groww’s market share in mutual funds rose to 13.7% from 12.3%.
Analysts’ Recommendations on Groww Shares
After the Q3 results, several brokerage firms weighed in with their views:
– Motilal Oswal:
– Rating: Buy
– Target Price: ₹190 (up from ₹185)
– Rationale: In light of robust revenue growth and margin expansion, driven by strong topline performance and operating leverage. An anticipated rise in employee and marketing expenses is projected to be outpaced by revenue growth, leading to further margin improvement.
– Citi Research:
– Rating: Buy
– Target Price: ₹190
– Insights: Highlighted that major retail brokers, including Groww, are transitioning towards comprehensive platforms for financial products. The brokerage noted Groww’s customer-centric model, brand recognition, and operational efficiency as significant advantages. With an estimated CAGR of 69.3% in adjusted EBITDA margins by FY2029, Citi forecasts an EPS CAGR of 35% over FY2026–FY2029.
Conclusion
In conclusion, while Groww’s latest quarterly results indicate some challenges, the substantial growth in revenues, market share improvement, and positive analyst outlooks suggest a resilient position. Investors should weigh these factors carefully. The increasing interest from brokerages on Groww shares suggests that buying now could be beneficial, particularly considering the positive trajectory indicated by their recent performances and sector growth potential.