Groww IPO Premium Falls 70% Amid Cautious Market Sentiment
The grey market premium for India's prominent fintech platform Groww has witnessed a dramatic decline of nearly 70%, falling from Rs 16 at its peak to approximately Rs 5 ahead of its public listing. This development reflects a modest 5% premium over the IPO price of Rs 402 per share, indicating measured investor sentiment following recent weak market debuts.
Market Dynamics and Investor Caution
The substantial drop in grey market premium signals a shift in investor psychology, particularly after disappointing performances from recent listings such as Lenskart. Market analysts anticipate Groww will debut with modest gains of 5-10%, supported by positive market conditions but constrained by recent market experiences.
"We expect Groww to list with a modest 5-10% gain, supported by positive market sentiment, but exuberance is likely to be capped due to recent weak debuts," noted Prashant Tapse of Mehta Equities.
Strong Subscription Despite Premium Decline
Despite the falling premium, Groww's Rs 2,580 crore IPO demonstrated robust demand with an overall subscription rate of 17.6 times. Qualified institutional buyers led the response with 22 times subscription, followed by non-institutional investors at 14.2 times and retail investors at 9.4 times.
The pre-listing quotes varied across sources, ranging from Rs 6.5 to Rs 17.25 above the IPO price band, according to Nitin Jain, senior research analyst at Bonanza.
Company Profile and Growth Trajectory
Established in 2017 and headquartered in Bengaluru, Groww has emerged as one of India's leading fintech platforms. The company provides comprehensive access to mutual funds, stocks, derivatives, ETFs, and IPOs through a unified digital platform, serving over 10 crore registered users with particular strength in smaller cities.
The company's financial performance demonstrates remarkable growth, reporting a net profit of Rs 1,824 crore in FY25 on revenues of Rs 4,061 crore. This represents a 45% increase in revenue and marks a significant turnaround from previous losses.
Valuation Concerns and Long-term Prospects
With an implied valuation of approximately 40 times FY25 earnings, market analysts suggest the stock appears fully valued at current levels. However, the company's scalable digital model and cost-efficient operations have attracted strong institutional interest.
Tapse characterized the IPO as "fairly priced in the Rs 95-100 range" and recommended a medium to long-term investment approach, stating, "Groww represents a strong long-term structural story and can act as a proxy for India's expanding capital market participation."
Strategic Use of Proceeds
The entire public issue comprises fresh equity designed to strengthen Groww's balance sheet and technological infrastructure. The company plans to utilize proceeds for corporate purposes, product development, and potential acquisitions to enhance its market position.
As India's capital markets continue expanding and digital adoption accelerates, Groww's performance will serve as a barometer for investor confidence in new-age fintech platforms. The market awaits whether the company's strong fundamentals and established brand can overcome prevailing caution surrounding recent listings.