Shares of Billionbrains Garage Ventures Ltd, the parent of online stock broking firm Groww, hit the 10 percent lower circuit on Wednesday, marking the first decline in the stock’s six-session trading history since its market debut on November 12.
Earlier in the day, the stock exchanges had reduced the circuit limit to 10 percent from 20 percent.
Groww’s shares were listed last week at a 12 percent premium to the IPO price of Rs 100, opening at Rs 112 apiece. The stock began trading at Rs 114 on the BSE, up 14 percent from the issue price, after the company’s Rs 95–100 price band public offer.
Until Tuesday’s close, the stock had surged nearly 94 percent from the IPO price to an all-time high of Rs 193.80, which it hit on November 18. The company’s market capitalisation crossed Rs 1.17 lakh crore, overtaking BSE Ltd and surpassing several Nifty constituents such as Tata Consumer Products, Max Healthcare Institute, Apollo Hospitals Enterprise and Dr Reddy’s Laboratories.
Groww faces 30 lakh-share auction; analysts flag deepening short-seller trap
In Wednesday’s session, the stock dropped to Rs 169.89 on the NSE after hitting the lower circuit, with the company's market capitalization declining to Rs 1.04 lakh crore.
The analysts have attributed the decline to profit booking following a sharp rally since listing.
"At Rs 1 trillion market cap, Groww is now trading at a PE multiple of 45–50 times, which is at a 100 percent premium to its broking peers," said Sunny Agrawal, Head of Fundamental Research at SBI Securities.
"Today’s correction seems to be profit taking after the exponential rise post listing. Risk-reward is still not favourable, and investors should wait for further dips and track upcoming quarterly results before adding the stock."
Groww is scheduled to announce its quarterly results on Friday, November 21 — its first since listing.
A second trigger will come on December 10 when the one-month shareholder lock-in ends. According to Nuvama Alternative and Quantitative Research, 149.2 million shares, or about 2 percent of outstanding equity, will become eligible for trading.
NSE data on Tuesday showed over 30 lakh shares of Billionbrains Garage Ventures entered the auction window — a volume analysts described as unusually high.
Analysts said the development indicates several short sellers misread the stock’s post-listing momentum. Expecting a quick pullback, traders sold shares they did not hold, assuming they could buy them back at lower levels the same day. The continued rally left many unable to arrange delivery on the settlement date, pushing a significant quantity of shares into the auction segment, they added.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
