Motilal Oswal initiates coverage with ‘BUY’ rating as India’s largest broker tries to prove it’s more than a derivatives play
Motilal Oswal just put out its first report on Groww after the company’s recent listing, and the numbers are eye-catching: they expect revenue to double from Rs 40.6 billion in FY25 to nearly Rs 80 billion by FY28. That’s a 25% CAGR, with profits growing even faster at 30%.
The brokerage has put a “BUY” rating with a target price of Rs 185—about 19% upside from the current Rs 156.
But here’s the interesting bit: this growth is supposed to happen while Groww dramatically reduces its dependence on the very thing that made it big—derivatives trading.
Whether that’s realistic is another question entirely.
Let’s talk about Groww
Groww is now India’s #1 broker by NSE active clients with a 26.8% market share (as of November 2025). That’s roughly 9 percentage points ahead of its nearest competitor.
Not bad for a company that started in 2016 as a mutual fund platform and only launched stock trading in FY21.
But look closer at the revenue mix: 85% still comes from broking in FY25, and a significant chunk of that is derivatives. This is the same F&O segment that regulators keep hammering with new restrictions—higher margins, fewer weekly expiries, bigger lot sizes.
Predictably, Groww’s F&O active clients dropped from 5.3 million in June 2024 to 3.4 million after SEBI’s latest crackdown. Revenue took a hit. The market noticed.
So analysts are now building their bull case on Groww successfully pivoting away from what made it successful. That’s… ambitious.
The diversification story
Motilal Oswal’s projections show broking falling to just 67% of revenue by FY28. The rest would come from MTF (margin trading), credit products, wealth management, and commodities.
MTF (Margin Trading Facility): The book has grown from Rs 1.3 billion in Q1 FY25 to Rs 16.7 billion in Q2 FY26. Analysts expect this to hit Rs 70 billion by FY28—a 4x jump.
But MTF is dominated by bank-backed brokers who have cheaper funding and deeper pockets. Can Groww really scale this aggressively? And what happens to credit quality if markets correct sharply?
Wealth Management: Groww acquired Fisdom (Rs 120 billion AUM) and launched “W by Groww” targeting affluent investors. The idea is to convert mutual fund customers into wealth management clients, then upsell PMS/AIFs.
Motilal estimates this could contribute 7% of revenue by FY28. That’s based on converting 30-40% of incremental MF flows from affluent users into advisory models, with assumed yields of 50-100 basis points.
Sounds good on paper. But wealth management is relationship-driven. Groww’s DNA is self-serve digital. Can they really scale a high-touch advisory business? Fisdom helps, but integrating acquisitions rarely goes as smoothly as investment banking models suggest.
Credit (LAS/LAMF): Loan against securities makes sense—Groww’s users have Rs 2.7 trillion sitting on the platform. Low customer acquisition cost, natural product fit, decent margins.
Credit revenue grew 323% in FY25. But from a tiny base. Even with projected growth, analysts expect credit to contribute just 6.7% of revenue by FY28.
Also worth noting: personal loan growth has already slowed due to regulatory tightening. LAS/LAMF are less risky, but they’re still small.
Commodities: Recently launched. Apparently seeing “strong traction” according to management. But commodities is crowded and volatile.
The part where Groww looks promising
Here’s what Groww genuinely does well: operational efficiency.
Over 80% of customers come organically—word-of-mouth, SEO, product virality. Customer acquisition cost is just Rs 800-1,200 with a 4-6 month payback period. Compare that to fintech companies burning millions on celebrity ads.
The entire tech stack is built in-house, keeping cost-to-serve at 12-14% of revenue. Only 9-10% of costs are variable. This is a lean, scalable model.
EBITDA margins hit 59% in FY25. As new revenue streams scale and fixed costs stay flat, analysts expect margins to expand to 66-68% by FY28.
That’s fine. But it also assumes everything goes right across multiple new businesses simultaneously.
The valuation story
Motilal Oswal values Groww at 28x FY28 P/E—about a 30% discount to Robinhood, which trades around 40x.
The discount makes sense. Groww is India-only, more concentrated in F&O, and more exposed to regulatory risk. Robinhood is geographically diversified and has a more balanced revenue mix (only ~55-60% from trading vs Groww’s 85%).
But analysts argue the gap should narrow as Groww diversifies. By FY28, if broking really does fall to 67% and MTF/wealth/credit scale up, maybe Groww deserves a higher multiple.
Big “if” though.
What could derail this?
More regulatory action: SEBI isn’t done with F&O. Another round of restrictions and Groww’s core business takes another hit. The entire FY26E looks weak precisely because of this—analysts expect only 13% revenue growth.
Competition: Zerodha has a cult following. Angel One is aggressive. Paytm has distribution muscle. Jio Broking just entered with telecom-level scale. The market’s getting crowded, and in commoditized businesses, that usually means price wars.
Market correction: If Nifty drops 20-30% and stays there, retail trading dies down. MTF defaults spike. Wealth AUM shrinks. Credit quality deteriorates. Groww’s entire revenue model—across all segments—is correlated to market sentiment.
Execution risk: Scaling wealth management, integrating Fisdom, managing LAS credit risk, building commodities—these aren’t easy. Groww has executed well historically, but they’ve never tried to do five different things at this scale simultaneously.
