Does Groww merit BSE multiple?

Billionbrains Garage Ventures Ltd (Groww) stock has been on a roller coaster ride since its listing on 12 November.

- Manish Joshi

The stock listed at ₹112 on NSE vis-à-vis the issue price of ₹100. It rallied until 18 November, when it closed at a high of ₹189, only to tumble for two consecutive days after that to ₹157. Though the stock had muted reaction on Friday immediately after the results, it fell by 4% on Monday.

The main question is whether the stock’s volatile movement is in sync with the fundamentals. Shareholding data from NSE shows Groww has 6.17 billion total outstanding shares, but only 440 million or about 7% are available for trading (the free float). A low free float leads to high volatility in a stock’s price, and the scarcity can also hamper fair price discovery that reflects its fundamental value.

Groww is a stock broking company, more specifically a discount broker. So, a comparison with other discount brokers makes sense. Discount brokers offer only a trading platform at a low brokerage rate (a flat rate in most cases).