Angel One Preferred Over Groww, Says Citi As It Initiates Coverage On Stockbrokers — Check Target Price

Stockbroking counters Angel One Ltd. and Billionbrains Garage Ventures Ltd, the operator of Groww, will be in focus heading into trade on Wednesday following Citi's coverage initiation.

In its latest note, the brokerage firm has initiated coverage on the two bro brokers, citing them as transformational plays due to the nascency of the Indian trading market.

Citi has initiated coverage on Angel One with a 'buy' rating and a target price of Rs 3,215, which implies an upside of 31.5% from Tuesday's closing price of Rs 2,441.

Citi has also initiated coverage on Groww with a 'buy' rating and a target price of Rs 195, implying an upside of 20% from Tuesday's closing price of Rs 162.31.

In its note, Citi has highlighted that both these companies have gone from being a market proxy to a one-stop shop for traders.

The firm's constructive stance on Angel One comes on the back its aggressive customer acquisition strategy and demonstrated business agility.

As for Groww, Citi is bullish on the company's niche market leadership, customer-centric approach, driving high brand recall and lean business structure.

Citi also notes that cross-sell potential remains high for both companies, as most of their products are integrated within the same platform.

The firm believes the nascency nature of Indian markets and regime change in the financial products’ purchase journey position the transformational plays in a sweet spot.

More importantly, it prefers Angel over Groww currently due to its brand repositioning and steady business diversification whilst benign valuation.

The Citi note also notes key downsides to be wary of, including market volatility and regulatory headwinds. It further notes that any re-rating would be contingent on effective business diversification.

It must be noted that Groww has already built a fund house and sells passive instruments. Angel One, too, offers passing instruments such as a Nifty50 Index fund.