Shares of Groww's parent company, Billionbrains Garage Ventures Ltd., are rebounding today, jumping roughly 6% ahead of the release of its Q2 results. The stock is currently trading at ₹166 on the BSE. Investors are eagerly awaiting the company's first financial report since its initial public offering (IPO) earlier this month.

Recent Market Performance

The market has shown volatility regarding Groww's stock. After an initial surge of nearly 94% in the first few sessions post-listing, the shares slid more than 18% in the following days. On Thursday, November 20, the stock dropped as much as 8.30% in early trading, reaching ₹155.79 per share. This decline followed another 9% dip the previous day, intensifying selling pressure after the strong post-listing rally. Despite the recent turbulence, Groww's share price remains significantly above its IPO issue price of ₹100.

Analyst Expectations for Q2 Results

The broader brokerage sector has faced headwinds, with many Indian firms experiencing pressure in Q2 due to a slowdown in overall trading activity. A fall in derivatives volumes after recent regulatory tightening has impacted revenues across the industry, with speculative and high-frequency traders pulling back.

Despite these challenges, Groww may still demonstrate stable to slightly positive revenue growth, primarily due to its substantial user base. The company's efforts to improve cross-selling by offering more investment options and features to existing customers could further bolster revenue.

Analysts suggest that investors should pay close attention to Groww's Q2 results to gauge whether the company's operational fundamentals align with the market's high expectations. Key metrics to watch include revenue growth trends, profitability, client acquisition data, and performance in new service segments.

Factors Driving Investor Optimism

Investor optimism in Groww is largely fueled by its leading position in India's retail investing boom, its extensive user base of over 12.6 million active clients, and its expansion into wealth management, commodities, and margin services. Additionally, analysts have pointed to Groww's strong digital platform, low customer acquisition costs, and scalable business model as competitive advantages.

Valuation Concerns

Despite the positive outlook, some analysts believe that Groww's valuation has become stretched. With a P/E multiple significantly higher than traditional broking peers, there are concerns that substantial future growth is already factored into the stock price. For example, Groww has a net profit margin of around 47%, which is well above Angel One's 22.3%. Its return on net worth stands at 37.57%, compared with Angel One's 20.85%.

Key Events Ahead

Besides the Q2 results announcement, market participants are also anticipating the conclusion of the one-month shareholder lock-in period on December 10. This event will make additional shares available for trading, potentially influencing stock price dynamics.

Groww's Financial Performance

Between fiscal years 2023 and 2025, Groww's revenue increased from ₹1,141 crore to ₹3,902 crore, reflecting a compound annual growth rate of nearly 85%. During the same period, profit after tax jumped from ₹458 crore to ₹1,824 crore, and EBITDA surged from ₹399 crore to ₹2,371 crore, demonstrating strong operating leverage as the user base scaled.

Q2 Results Overview Groww Q2 profit has increased 12% year-on-year to ₹471.33 crore, compared to ₹420.16 crore in the year-ago quarter. The company's revenue has fallen 9.5% year-on-year. The company's margin is at 59.3% compared to 53.4% (QoQ). EBITDA is up 25% at ₹603.3 crore compared to ₹483.2 crore (QoQ).