Groww Stock Drops 5% Ahead of Key Lock-in Expiry, Wiping Out Some IPO Gains

Groww Stock Drops 5% Ahead of Key Lock-in Expiry, Wiping Out Some IPO Gains

Groww’s parent Billionbrains Garage Ventures has dropped about 4–5% just before a key lock‑in expiry, as the market braces for nearly ₹2,200–2,300 crore worth of locked shares becoming tradable and reassesses rich post‑IPO valuations. Even after the correction, the stock still sits roughly 40–45% above its IPO price, so part of the move reflects normal price discovery and profit‑booking after an exceptional early rally.​

What Triggered the 5% Fall

On 9 December, Groww shares fell to around ₹144–145 apiece, slipping nearly 5% and snapping a short two‑day winning streak ahead of the 10 December lock‑in expiry. The pullback came after the stock had already seen sharp volatility since listing, including a near‑94% surge in just five sessions and subsequent double‑digit corrections.​

According to Nuvama and other estimates, about 14.92 crore shares—roughly 2% of Groww’s outstanding equity—will become freely tradable as the one‑month post‑listing lock‑in for a category of shareholders ends on 10 December. At the previous close, this block was valued at over ₹2,260 crore, creating a visible “liquidity overhang” that often leads traders to turn cautious or front‑run potential supply.​

IPO Performance, Rally and Partial Give‑Back

Groww listed on 12 November at around ₹112 per share, a 9–12% premium over its ₹100 IPO price, after the ₹3,900 crore issue was subscribed about 2.5 times, driven largely by institutional demand. In the first five sessions, the share price nearly doubled to a peak near ₹193.80–194, implying gains of roughly 90–94% over the issue price and creating significant mark‑to‑market profits for early investors.​

Since that peak, the stock has corrected about 25–30%, hit at least one 10% lower circuit, and then oscillated as the market digested the initial exuberance, high valuations, and headlines around upcoming lock‑in expiries. Even after the recent 4–5% slide, various reports note that the share remains roughly 40–47% higher than its IPO price and around 25–30% above the listing price, underscoring that some froth is simply being taken off.​

Lock‑in Expiry: Why Markets Care

The immediate trigger for the latest drop is the 10 December expiry of part of the one‑month lock‑in for certain shareholders—typically anchor investors, early backers or pre‑IPO holders. Once the lock‑in ends, about 14.92 crore shares become eligible to trade, increasing free float from what has so far been a very tight 7% or so, a key reason for the wild swings since listing.​

Analysts stress that a lock‑in expiry does not automatically mean these shares will be dumped; it only allows owners to sell if they wish. However, history shows that when concentrated pre‑IPO holders finally get the chance to monetise, even moderate selling can pressure a newly listed, low‑float stock, especially one that has already doubled from issue price.​

Fundamentals: Strong Growth but Premium Valuation

Fundamentally, Groww remains a fast‑growing, profitable fintech, which partly explains why the stock still trades well above IPO levels despite volatility. In the most recent reported quarter, the company posted profit of about ₹470 crore and revenue slightly above ₹1,000 crore, continuing its track record of rapid top‑ and bottom‑line growth. This makes Groww one of the relatively rare Indian new‑age platforms that is already profitable at scale, unlike many earlier tech listings that were still loss‑making.​

The flip side is valuation: PEG‑based and earnings‑based analyses highlight that Groww trades at a premium multiple even after the correction, with projected PEG ratios above 1.3–1.6 under different growth scenarios. Commentators also flag that fee‑income sensitivity to market volumes and flows means earnings could be cyclical, raising the bar for sustaining such rich multiples through full market cycles.​

Why the Stock Is So Volatile

Several structural factors explain the “rollercoaster” in Groww’s share price:

• Low free float: With only about 7% of equity initially available, even moderate buy or sell orders lead to large price swings, amplifying the impact of sentiment shifts.​

• High expectations: A near‑100% post‑IPO rally priced in very optimistic growth and margin assumptions, leaving little room for disappointment or profit‑booking without a sharp reaction.​

• Event‑driven trading: The timeline of anchor and shareholder lock‑in expiries (partial at 30 days, remainder at 90 days) has become a focal point for traders, creating event‑based volatility spikes such as the current 5% drop.​

• Sector sentiment: Tech and fintech listings globally have seen “hot money” flows, so changes in risk appetite, global cues or peer stock moves often spill over into Groww.​

What This Means for Investors

In essence, the 5% slide ahead of the lock‑in expiry reflects a mix of supply concerns, profit‑booking and a partial re‑rating from euphoric levels, rather than any sudden collapse in the underlying business. The key watchpoints over the next few weeks will be how much of the newly unlocked 14.92 crore shares actually hit the market, whether institutional holders choose to stay put, and how Q3 and subsequent earnings stack up against the high‑growth narrative that fuelled the early rally.​

For an in‑depth article, this sets up a clear storyline: a profitable fintech that delivered blockbuster early gains, now entering a more mature phase of price discovery where lock‑in expiries, valuation debates and earnings delivery will decide whether the IPO gains consolidate, expand, or unwind further.

Brokerage commentary on Groww is broadly positive on the business but cautious on valuation, with most views framing it as a high‑quality, long‑runway fintech that is “fair to rich” rather than cheap at current levels. Explicit target prices are limited so far, but medium‑term reference bands from analysts cluster roughly in the ₹125–130 zone (early post‑IPO calls) versus a much higher live price now, implying that subsequent rallies have overshot initial fair‑value estimates and heightened valuation risk.​

How Brokerages See Groww’s Valuation

Pre‑ and post‑IPO research typically valued Groww at about 30–34x FY25 earnings, translating into a market cap around ₹61,700–61,736 crore at the upper IPO band. Commentators compared this to traditional brokers and concluded the IPO was “fairly/fully priced” rather than a bargain, with the Street willing to pay up for market leadership, profitability and a long growth runway.​

More recent PEG‑based analysis shows Groww still trading at a premium: PEG ratios of roughly 1.64 in a base‑case (25–30% revenue CAGR) and about 1.35 in a higher‑execution, stronger‑ARPU scenario. Since a PEG of 1.0 is often treated as “fair value”, these numbers signal that the stock is priced for strong execution, leaving limited room for disappointment on growth or margins.​

Specific Target Bands and Recommendations

Named brokerage and analyst views so far include:

• Mehta Equities (Prashanth Tapse): At listing, he called Groww a “long‑term structural story” and advised allotted investors to HOLD, citing a medium‑term target of ₹125–130 when the stock was around that zone. For non‑allottees, he suggested waiting for meaningful corrections before accumulating.​

• Other IPO reviewers / broker platforms: Several review pieces for the IPO concluded that the ₹95–100 band and ~30–34x FY25 P/E multiple were acceptable for long‑term investors but that near‑term upside might be capped due to the rich starting valuation.​

• Stylus/Smartkarma‑type commentary: Notes quoted in business media describe the post‑listing valuation (around ₹79,000+ crore, or roughly ₹8.6–8.9 billion) as “a trade‑off between dominant position in a high‑growth industry and meaningful regulatory/market‑cycle risk at a premium valuation”.​

Crucially, after the stock nearly doubled post‑IPO, commentators shifted tone from “fairly priced, hold for long term” to emphasising that current levels largely discount future growth and that any slowdown could trigger a de‑rating.​

Key Valuation Arguments Used by Analysts

Brokerages and independent analysts consistently highlight:

• Positives:

  • Dominant position in retail broking and mutual fund distribution, with active user CAGR above 50% between FY23 and June 2025.​

  • High profitability for a fintech: FY25 revenue near ₹3,902 crore and net profit around ₹1,824 crore, giving strong margins for a platform business.​

  • Asset‑light, scalable model with guided revenue growth of 25–30% and cost growth of 15–20% over the next few years, supporting operating leverage.​

• Concerns:

  • Valuation premium vs both traditional brokers and many growth benchmarks (P/E ~30x at IPO, PEG >1.3–1.6 in projections).​

  • High dependence on broking (over 80% of revenue), making earnings sensitive to market volumes and sentiment.​

  • Regulatory and competitive risks in broking/fintech that could compress pricing or limit cross‑sell, challenging the implied growth path.​

How Views Have Evolved After Listing

At IPO time, the dominant stance was “subscribe for long term” or neutral/hold, with an expectation of modest (5–15%) listing gains and upside driven mainly by multi‑year growth. Once the stock rallied 60–90% over issue price in days, commentary shifted to stressing that valuations had become stretched and that flows, regulation and lock‑in events would drive near‑term swings more than fundamentals.​

Recent valuation pieces tie together this premium with upcoming lock‑in expiries, arguing that as free float rises and speculative froth settles, price discovery should move closer to growth and earnings delivery, rather than pure scarcity and sentiment. For an article, that sets up a clear angle: Groww as a rare profitable fintech with enviable metrics, but where most broker and analytical views now focus on whether the stock’s premium valuation can be justified by sustained 25–30%+ growth in a cyclical, regulated business.