Billionbrains Garage Ventures, the parent company of stock broking platform Groww, reported steady Q2FY27 earnings despite a challenging quarter for the derivatives segment. Analysts remained bullish on the stock, citing revenue diversification, margin trading facility (MTF) growth and cost efficiencies as key drivers of its performance.
Kotak Securities, Jefferies and Macquarie maintained their positive ratings on the Groww shares, with price targets ranging from Rs 240 to Rs 260.
Groww reported a net profit of Rs 726 crore in the second quarter of FY27, down 1.2% from Rs 735 crore in the preceding quarter. Revenue declined marginally by 0.5% sequentially to Rs 1,541 crore from Rs 1,549 crore in the June quarter.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
On a year-on-year (YoY) basis, Groww's revenue from operations increased 47%, while EBITDA rose 61%. EBITDA margin stood at 64.5%, compared with 59.3% in the year-ago quarter.
Despite the sequential moderation, brokerages highlighted the company's ability to offset weakness in derivatives trading through growth in other revenue streams.
Jefferies maintained its ‘Buy' call with Groww share price target of Rs 240, citing higher cash equity revenues and lower operating expenses. The target price implies an upside potential of more than 24% from Wednesday's closing price.
The brokerage noted that options revenue accounted for less than half of Groww's total revenue, indicating continued diversification. It also highlighted the potential contribution of US stock investing, currently being tested, which could add around 9% to FY28 profit after tax.
ALSO READ: HSBC Picks Financials Over Staples, Bets On Industrials As India Valuations Cool
Jefferies added that the resolution of CAS-related issues by the Securities and Exchange Board of India (SEBI) could accelerate earnings growth in the December quarter.
Macquarie retained its ‘Outperform' rating and price target of Rs 260, implying an upside potential of 35% from Wednesday's close, attributing the quarterly performance to growth in MTF and consumer credit.
The brokerage also highlighted lower customer acquisition costs due to the absence of Indian Premier League-related promotional spending during the quarter.
Macquarie expects Groww to benefit from market share gains, new product launches and expanding opportunities in wealth management and asset management.
Kotak Institutional Equities retained its ‘Buy' rating with an unchanged fair value of Rs 245, highlighting the company's diversified revenue drivers and lower operating costs.
The brokerage said growth in MTF, commodities and initial public offering (IPO) allocation fees largely offset weakness in derivatives trading amid the closing auction session (CAS)-related impact.
Kotak expects a recovery in stock and futures and options (F&O) trading volumes in the second half of FY27, alongside steady growth in MTF.
ALSO READ: Catch Stock Market Live Updates Here
Disclaimer: The views and opinions expressed by the investment advisers on NDTV Profit are of their own and not of NDTV Profit. NDTV Profit advises users to consult with their own financial or investment adviser before taking any investment decision.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
