Shares of Billionbrains Garage Ventures, the parent company of stockbroking platform Groww, saw sharp selling pressure on November 19 as the stock fell 10 percent to hit the lower circuit. The decline comes after a powerful post-listing rally that pushed the stock to almost double its IPO price within just five sessions, prompting investors to book profits.

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Strong Market Debut Followed by Rapid Surge Analysts Raise Red Flags on Valuation Industry Facing Regulatory Headwinds Mixed Recommendations for Investors

Strong Market Debut Followed by Rapid Surge

Groww made its stock market debut on November 12, listing on the BSE at ₹114 per share, a 14 percent premium over its IPO price. The stock sustained strong momentum throughout the week, climbing nearly 94 percent from its issue price. It hit a high of ₹193.91 per share, reflecting intense investor interest in the newly listed brokerage.

However, the surge cooled on Wednesday, when the stock was locked at the lower circuit of ₹169.94 apiece during morning trade as profit booking intensified.

Also Read: Tenneco Clean Air India Shares List at 27% Premium; Strong Market Debut

Analysts Raise Red Flags on Valuation

According to Nitin Jain, Senior Research Analyst at Bonanza, Groww’s rapid run-up post-listing has pushed its valuation far above many traditional capital market peers. He explained that the implied P/E multiple at the time of the IPO was already high at around 33–37x, whereas established players such as Motilal Oswal and Angel One typically trade at lower multiples.

Jain added that Groww is now trading at a P/E of 61x, significantly higher than its peers:

Motilal Oswal: 29x
Angel One: 33x
Nuvama Wealth: 26x
IIFL Wealth: far below Groww’s current valuation

He noted that Groww’s valuation has crossed ₹1 lakh crore, surpassing several older capital market companies. According to him, the valuation premium is largely being justified on expectations of digital scale and future product expansion, but may require caution from value-oriented investors. Growth-focused investors, on the other hand, may still find comfort if long-term projections play out.

Industry Facing Regulatory Headwinds

Brokerage firm Master Capital Services pointed out that the industry might face near-term challenges due to recent SEBI policy adjustments and regulatory changes. However, it added that long-term trends such as financialisation and rising retail participation in Indian markets continue to create opportunities for the sector.

Mixed Recommendations for Investors

Shivani Nyati, Head of Wealth at Swastika Investmart, said that despite Groww’s strong growth, concerns persist around high valuation multiples, margin pressures, and regulatory risks tied to the fintech and brokerage space. She noted that the IPO saw significant institutional participation, driven by expectations of strong market share gains, robust customer additions, and improving operating leverage.

Nyati advised that investors who were allotted shares may book partial profits while holding the rest for the medium to long term with a stop-loss of ₹80.

On the other hand, Prashanth Tapse from Mehta Equities suggested that non-allotted investors should consider accumulating Groww on dips. He stated that existing investors should continue to hold for the long term, given the firm’s structural strengths and growth potential, while acknowledging short-term risks.

30 Lakh Shares Move Into Auction Window

In a notable development, NSE data on Tuesday revealed that over 30 lakh shares of Billionbrains Garage Ventures had moved into the auction window — a level analysts described as unusually high.

This situation appears to stem from short sellers underestimating Groww’s post-listing strength. Expecting the rally to fade, several traders reportedly sold shares without holding them, planning to buy them back at lower prices. Instead, the stock continued rising, leaving many unable to deliver shares on the settlement date and pushing the large quantity into the auction segment.

Disclaimer: Expert views are sourced from Moneycontrol. Users should consult certified professionals before making investment decisions.

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