Motilal Oswal Financial Services has initiated coverage on Billionbrains Garage Ventures Ltd. (Groww) with a BUY recommendation, assigning a one-year target price of Rs 185, implying an upside of about 19% from the current market price of Rs 156. The brokerage’s bullish stance is anchored in Groww’s rapid emergence as India’s largest retail broking platform by active NSE clients, its expanding monetization levers beyond pure broking, and a cost-efficient, technology-led operating model. As India’s capital markets deepen and retail participation broadens, Motilal Oswal expects Groww to compound earnings at a robust pace, supported by margin trading facilities, credit adjacencies, and wealth management expansion, while steadily reducing earnings volatility.

A Digital Brokerage Powerhouse Riding India’s Structural Investing Boom

Billionbrains Garage Ventures has transformed from a zero-revenue mutual fund distributor into India’s largest digital-first brokerage platform in under four years. With a 26.8% share of NSE active clients as of November 2025, Groww now leads the retail broking landscape. Motilal Oswal expects revenue to double over FY25–FY28, driven by diversification into margin trading, commodities, credit, and wealth management. Operating leverage, low customer acquisition costs, and an in-house technology stack underpin margin expansion toward 66% by FY28. The brokerage projects a 30% CAGR in earnings, justifying its BUY call and Rs 185 target.

India’s Capital Markets: A Long Runway for Digital Brokers

India remains structurally under-penetrated in equity participation, creating a fertile backdrop for platforms like Groww. While demat accounts have surged to over 200 million, only about 11–13% of India’s adult population participates in capital markets, compared with roughly 62% in the United States. Discount brokers now command nearly 78% of NSE active clients, up from single digits a decade ago, reflecting a decisive shift away from traditional brokerage models.

Retail cash market volumes have more than doubled since FY20, and although regulatory tightening has moderated derivatives activity in the near term, long-term participation trends remain intact. Motilal Oswal views this structural transition as a multi-year opportunity for scalable, low-cost digital platforms.

Groww’s Market Leadership: Scale Achieved at Unprecedented Speed

Groww has scaled faster than any peer in India’s broking history. By November 2025, the platform commanded a 26.8% share of NSE active clients—around nine percentage points ahead of the second-largest competitor. Initially positioned as a zero-commission mutual fund app, Groww now holds approximately 25.8% share in retail cash equities and 17.3% in derivatives.

The platform served 14.8 million active users across products by 1HFY26, supported by a strong retention profile—nearly 78% of users remain active after three years. This scale has translated into a near threefold jump in revenue between FY23 and FY25.

Broking Economics: Pricing Power and Product Depth

Contrary to concerns about price sensitivity, Groww has demonstrated pricing power. The company increased its minimum brokerage to Rs 5 from Rs 2 and doubled DP charges, yet active cash-market users continued to rise. Motilal Oswal attributes this resilience to Groww’s ease of use, brand trust, and expanding product suite.

Broking revenue is expected to grow at a 16% CAGR over FY25–FY28, even as its contribution to total revenue declines from 85% to about 67%, reflecting successful diversification rather than structural weakness.

Margin Trading Facility: A High-Yield Growth Engine

The Margin Trading Facility (MTF) represents one of Groww’s most powerful monetization levers. The MTF book has already scaled to Rs 17 billion and is projected to reach Rs 70 billion by FY28. With interest yields of roughly 15% and additional brokerage income, MTF meaningfully lifts average revenue per user and stabilizes cash flows.

Motilal Oswal estimates MTF revenue contribution to rise from 1% in FY25 to about 12% by FY28, materially improving earnings quality.

Credit and Wealth Management: Building a Multi-Vertical Platform

Groww is evolving beyond a transactional broker into an integrated financial ecosystem. Loan products such as Loans Against Securities (LAS) and Loans Against Mutual Funds (LAMF) leverage existing customer assets, generating incremental income with near-zero acquisition cost.

Simultaneously, the acquisition of Fisdom accelerates Groww’s entry into wealth management. The affluent user base—around 300,000 customers holding one-third of platform assets—creates a natural funnel for PMS, AIFs, and advisory services. Wealth management is expected to contribute roughly 7% of revenue by FY28.

Operating Leverage: Cost Discipline Driving Margin Expansion

Groww’s profitability profile is among the strongest in the sector. Nearly 90% of costs are fixed, enabling substantial operating leverage as revenue scales. Customer acquisition costs remain exceptionally low at USD 6–10 per user, with more than 80% of customers acquired organically.

Motilal Oswal projects EBITDA margins to expand from 59% in FY25 to 66.4% by FY28, supported by rising contribution from non-broking revenues and stable cost-to-serve metrics.

Financial Outlook: Strong Earnings Visibility

Motilal Oswal forecasts a robust growth trajectory across key financial metrics.

The brokerage expects FY25–FY28 revenue, EBITDA, and PAT CAGR of 25%, 30%, and 30% respectively.

Valuation and Investment Levels

Motilal Oswal values Groww at 28x FY28E earnings, assigning a one-year target price of Rs 185. This represents a meaningful discount to global peer Robinhood, which trades at roughly 40x forward earnings. As Groww’s revenue mix diversifies and earnings volatility declines, the brokerage expects this valuation gap to narrow.

Investment View: BUY
Current Market Price: Rs 156
Target Price: Rs 185
Upside Potential: ~19%

Key risks include further regulatory tightening in derivatives and intensifying competition, though Groww’s diversified revenue streams and cost discipline offer a buffer.