The main question is whether the stock’s volatile movement is in sync with the fundamentals. Shareholding data from NSE shows Groww has 6.17 billion total outstanding shares, but only 440 million or about 7% are available for trading (the free float). A low free float leads to high volatility in a stock’s price, and the scarcity can also hamper fair price discovery that reflects the fundamental value of the stock.
Groww is a stock broking company, more specifically a discount broker. So, a comparison with other discount brokers makes sense. Discount brokers offer only a trading platform at a low brokerage rate (a flat rate in most cases).
Groww’s maiden results since listing show the year-on-year comparison is affected by one-offs. Quarter-on-quarter, consolidated revenue from operations for the three months to September (Q2FY26) increased 11% to ₹1,019 crore, mainly led by nearly 10% growth in broking orders. Ebitda (adjusted for one-offs) grew by 23% to ₹624 crore. Net profit came in at ₹471 crore.
Annualizing Groww’s Q2 net profit translates to a profit of ₹1,900 crore for FY26, which means the stock trades at a price-to-earnings ratio of 51. For perspective, Angel One Ltd—India’s third-largest stock broking firm by active client base after Groww and the unlisted Zerodha—is primarily engaged in discount broking, and trades at a price-to-earnings ratio of 27, as per Bloomberg estimates.
Is the high valuation justified?
The sheer size of Groww’s market capitalization, almost ₹1 trillion, has sparked comparisons with other capital-market-related plays such as BSE Ltd, the only listed stock exchange, valued at ₹1.16 trillion. Now, can a stock broking platform with almost no entry barriers be worth as much as a stock exchange, which has far higher entry barriers and only NSE as competition? Well, both Groww and BSE trade at almost identical price-to-earnings ratios for FY26.
To justify the high valuation, optimists would argue that Groww’s profit growth could be exponential in future. That may be true to a certain extent due to the huge operating leverage available. Groww spends just 12.5% of its revenue from a client as variable cost of servicing.
But the critical factor to watch out for is the stickiness of clients, who are quick to migrate from one broker to another. Even when the industry’s active client base fell in October, Groww added 138,000 active clients. This suggests some of its gains have come at the expense of others. For perspective, Zerodha and Angel One lost 62,000 and 35,000 clients last month, respectively.
The industry’s active client base may have the potential to increase, considering its low penetration levels and demographic profile, but the growth may not be linear. In fact, the base has fallen from 50.2 million at the start of 2025 to 45.3 million at the end of October. Even if growth resumes, it may be difficult to retain leadership as a new player could do to Groww what it did to Zerodha.
Billionbrains Garage Ventures Ltd (Groww) stock has been on a roller coaster ride since its listing on 12 November. The stock listed at ₹112 on NSE vis-à-vis the issue price of ₹100. It kept rallying till 18 November when it closed at ₹189, only to tumble for two consecutive days after that to ₹157. The stock is marginally up since its results were announced on Friday during early trading hours.
The moot question is whether the stock’s volatile movement is in sync with the fundamentals? The shareholding data on NSE shows Groww’s total outstanding shares are 6,170 million, but the shares available for trading or free float are 440 million or about 7%. Low free float leads to high volatility in stock prices and the scarcity premium may not lead to fair price discovery that reflects the fundamental value of the stock.
Groww is a stock broking company, more specifically a discount broking one. So, the comparison with other discount brokers makes more sense. Discount brokers offer only the trading platform at a low brokerage rate (flat rate in most cases).
Groww’s maiden results post listing shows the year-on-year comparison is affected by one-offs. Quarter-on-quarter, consolidated revenue from operations for the three months ended September (Q2FY26) increased 11% to ₹1,019 crore, mainly led by nearly 10% growth in broking orders. Ebitda (adjusted for one-offs) grew by 23% to ₹624 crore. Net profit came in at ₹471 crore.
Annualizing Groww’s Q2 net profit, translates into a profit of ₹1,900 crore for FY26, which means the stock trades at a price-to-earnings ratio of 51 times. For perspective, Angel One Ltd, the third largest stock broking firm by active client base after the unlisted Zerodha and primarily engaged in discount broking trades at a price-to-earnings ratio of 27 times, as per Bloomberg estimates.
Interestingly, the sheer size of Groww’s market capitalization at almost ₹1 trillion has led to comparisons with other capital-market-related plays such as BSE Ltd, the only listed stock exchange that is valued at ₹1.16 trillion. Now, can a stock broking platform with nearly no entry barrier be worth as much as a stock exchange with far higher entry barriers and with only NSE as its key rival? Still, both Groww and BSE are trading at almost the same price-to-earnings ratios for FY26.
To justify the high valuation, optimists would argue that Groww’s profit growth could be exponential in future versus BSE. That may be true to a certain extent due to the huge operating leverage available. Groww spends just 12.5% of its revenue from a client as variable cost of servicing.
But the critical factor to watch out for is the stickiness of clients who are quick to migrate from one broker to another. Even when the industry’s active client base fell in October, Groww added 1.38 lakh active clients. This suggests some of Groww’s gains have come at the expense of others. For perspective, Zerodha and Angel One lost 62,000 and 35,000 clients last month, respectively.
The industry’s active client base may have potential to increase considering low penetration level and demographic profile, but the growth may not be linear. In fact, the base has fallen from 50.2 million when 2025 began to 45.3 million at October-end. Even if growth resumes, it is difficult to retain leadership as a new player could do to Groww what it did to Zerodha.
