Stock to sell: Trouble for Groww parent? JM Financial sees up to 13.5% downside in Billionbrains Garage Ventures

Groww Share Price Today: Shares of Billionbrains Garage Ventures, the parent of online investment platform Groww, stayed under pressure on Monday after JM Financial initiated coverage on the stock with a ‘Sell’ rating, flagging regulatory risks and concerns over the company’s revenue concentration.

The stock was trading 1.46 per cent lower at Rs 170.38 on the National Stock Exchange at 12:12 pm IST.

JM Financial flags downside risk

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JM Financial has set a target price of Rs 144 on the stock, indicating a potential downside of around 13.5 per cent from current levels. The brokerage believes the risk-reward remains unfavourable amid rising regulatory pressure on stockbroking firms.

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RBI’s CME norms weigh on sentiment

According to JM Financial, the Reserve Bank of India’s revised Capital Market Exposure (CME) norms could significantly tighten the operating environment for brokers. The updated rules mandate a 100 per cent collateral requirement for funding and a 40 per cent haircut on shares used as collateral, which could increase trading costs and restrict leverage. These norms will come into force from April 1, 2026.

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Heavy dependence on broking business

The brokerage highlighted that about 88 per cent of Billionbrains Garage Ventures’ revenue in Q2FY25 came from its broking business, including margin trading facilities (MTF) and interest earned on client funds. JM Financial expects this dependence to persist, with over 80 per cent of revenue likely to continue coming from broking operations till FY28.

Limited diversification cushion

JM Financial cautioned that lending and wealth management businesses are expected to contribute less than 20 per cent to overall revenue over the medium term. In such a scenario, ancillary businesses may not be sufficient to cushion the impact of any cyclical slowdown or regulatory action affecting the core broking segment.

Regulatory scrutiny hits derivatives volumes

The brokerage also pointed to a decline in derivatives activity following regulatory measures by the Securities and Exchange Board of India. Groww’s futures and options order volumes declined 15 per cent and 21 per cent, respectively, in the third and fourth quarters of FY25, after Sebi increased contract sizes. JM Financial said continued regulatory scrutiny could further weigh on the company’s business model.

Stock performance since listing

Despite the recent pressure, the stock has gained 31.67 per cent since its listing in November 2025, outperforming the Nifty 50, which has declined about 1.6 per cent over the same period.