{"id":38942,"date":"2025-11-07T17:46:12","date_gmt":"2025-11-07T12:16:12","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=38942"},"modified":"2025-11-08T08:56:25","modified_gmt":"2025-11-08T03:26:25","slug":"the-weekly-wrap-groww-pine-repeat","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/the-weekly-wrap-groww-pine-repeat\/","title":{"rendered":"Groww, Pine, Repeat?"},"content":{"rendered":"

Exactly four years ago, between November 8 and November 10, 2021, One97 Communications Ltd launched what was then India\u2019s biggest initial public offering. The IPO of the company behind payments app Paytm comprised a fresh issue of Rs 8,300 crore and an offer for sale of Rs 10,000 crore by founder Vijay Shekhar Sharma, Japanese technology investor SoftBank, Chinese ecommerce giant Alibaba\u2019s affiliate Ant Financial, and Indian venture capital firm Elevation Capital.<\/span><\/p>\n

The IPO was covered barely 1.89 times and Paytm allotted its shares at Rs 2,150 apiece at a valuation of Rs 1.49 trillion, or about $20 billion. But retail investors, mutual funds and others who bought the IPO suffered a shock when Paytm listed on stock exchanges later that month. For, Paytm\u2019s shares cratered 27% on the listing day.\u00a0<\/span><\/p>\n

Paytm\u2019s shares kept falling over the following year, as investors fretted about its lack of profitability, its business model and other concerns. By November 2022, the shares had plunged nearly 80%. It wasn\u2019t until this year that the shares began to recover. Paytm\u2019s stock is currently around Rs 1,300 apiece and its market cap is nearly Rs 84,400 crore, or about $9.5 billion. That\u2019s half of its IPO valuation!<\/span><\/p>\n

But why are we reminding ourselves of Paytm now? Well, that\u2019s because after the fiasco of the first major Indian fintech company four years ago, two more fintech companies are going public this week\u2014stock broker Groww\u2019s parent Billionbrains Garage Ventures Ltd and point-of-sale terminals provider Pine Labs Ltd.<\/span><\/p>\n

The Groww IPO consists of a fresh issue of Rs 1,060 crore and an offer for sale of Rs 5,572.30 crore at the upper end of the Rs 95-100 price band. The sellers include venture capital investors Peak XV Partners, Tiger Global and Y Combinator, who will all earn multi-bagger returns on their investments\u2014just like Paytm\u2019s pre-IPO investors. Groww, which competes with Zerodha, Angel One and several other stock brokers, will command a valuation of about Rs 61,700 crore in the IPO.<\/span><\/p>\n

As for Pine Labs, the fintech firm has set a price band of Rs 210-221 a share and is seeking a valuation of up to Rs 25,400 crore. The IPO will raise about Rs 3,900 crore. This includes a fresh issue of Rs 2,080 crore while the remaining is an offer for sale by Peak XV Partners, US-based PayPal and Mastercard, and Singapore\u2019s Temasek.<\/span><\/p>\n

So, will Groww and Pine Labs go the Paytm way or reward their IPO investors? Well, we aren\u2019t in the business of fortune telling here. But let\u2019s just point out a few things. For one, Groww and Pine Labs seem to be on a much stronger footing than Paytm was at the time of its IPO. Groww, for instance, has emerged as India\u2019s largest stock broker by number of active users despite stiff competition from the likes of Zerodha, Angel One and legacy players like Motilal Oswal and IIFL. (Disclaimer: Kuvera competes with Groww and Zerodha in the mutual fund investment segment).<\/span><\/p>\n

Meanwhile, Pine Labs has a strong point-of-sale merchant payment business and a payments aggregator business where it competes with Paytm, Walmart-owned PhonePe and Razorpay, among others.<\/span><\/p>\n

There is one more big difference\u2014both Groww and Pine Labs are already profitable while Paytm was making losses when it floated its IPO. Still, there are some valuation concerns\u2014at least for Groww. On the other hand, Pine Labs has kept its valuation target relatively modest and below the $5 billion tag it achieved in 2022 when it raised private funding.<\/span><\/p>\n

Overall, the two IPOs add to the flurry of listings in what is likely to be a record year for India\u2019s primary markets this year. Already, the local units of Hyundai and LG as well as non-bank lenders Tata Capital and HDB Financial have floated large IPOs. Eyewear retailer Lenskart and edtech company PhysicsWallah will also float IPOs this month. But, as we keep saying, don\u2019t rush just because everyone else is and do your due diligence before investing.<\/span><\/p>\n

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\"SIP_Kuvera\"<\/b><\/strong><\/span><\/p>\n

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Ola\u2019s Struggles<\/b><\/h3>\n

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Paytm isn\u2019t the only tech startup that has left its IPO investors with a hangover. Another such company is Ola Electric, the electric scooter maker founded by Bhavish Aggarwal.<\/span><\/p>\n

Ola Electric floated its IPO in August last year, selling shares at Rs 76 apiece. The IPO helped its venture capital investors, such as US-based Tiger Global, India\u2019s Matrix Partners and Japan\u2019s SoftBank mint money. But those who would have invested in the IPO and didn\u2019t sell on the listing day or in the initial few weeks would now be sitting on losses.<\/span><\/p>\n

The company\u2019s shares jumped 20% on their debut and nearly doubled in August 2024, touching a high of Rs 157.53 and giving it a valuation of almost Rs 70,000 crore. Cut to 14 months later and the stock is now tottering below Rs 50 apiece, valuing the company a shade below Rs 21,000 crore.\u00a0<\/span><\/p>\n

This disastrous stock market performance is partly the result of its poor operational and financial performance. The company has lost market share, remains in the red and, this week, slashed its revenue forecast for the current fiscal year.<\/span><\/p>\n

The EV maker said it now expects revenue for this fiscal year to be between Rs 3,000 crore and Rs 3,200 crore, down from the Rs 4,200-4,700 crore it projected just last quarter and a third lower than last year\u2019s revenue of Rs 4,665 crore.<\/span><\/p>\n

The company posted a consolidated net loss of Rs 418 crore for the July-September quarter, compared with a loss of Rs 495 crore rupees a year earlier. Quarterly sales volumes almost halved, pulling revenue down 43% to Rs 690 crore.<\/span><\/p>\n

On the plus side, Ola retained its FY26 gross margin target of 40% for its core automotive business and hopes to reduce operational expenditure next year as it has started fitting its own battery cells instead of importing them.<\/span><\/p>\n

The focus on profitability instead of sales volume has dragged its market share down. The company, once India\u2019s top electric scooter maker with a share of over 50%, now ranks below TVS Motor, Ather Energy and Bajaj Auto. In fact, Ather Energy\u2014an EV startup that floated its IPO in May\u2014now has a higher market cap of over Rs 24,000 crore as its shares have nearly doubled from the IPO price of Rs 321 to hover around Rs 634 currently.<\/span><\/p>\n

Clearly, something isn\u2019t going right for Ola Electric. To reduce its reliance on e-scooters, the company has now entered the battery storage market. Will that help in reviving its fortunes? We will keep you posted!<\/span><\/p>\n

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Sales on Fire<\/b><\/h3>\n

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Ola Electric may be struggling but India\u2019s auto industry recorded its highest-ever festive sales this year, with a 21% jump in total retail volumes during the 42-day Dussehra-to-Diwali period, according to the Federation of Automobile Dealers Associations (FADA). The standout performer was the passenger vehicle (PV) segment, which saw a robust 23% year-on-year growth, driven by improved supply chains, aggressive discounting, and a GST rate cut on smaller cars announced just ahead of the festive season.<\/span><\/p>\n

In a breakdown of category performance, two-wheelers surged 22% as rural demand revived amid better crop prospects and easier financing. Commercial vehicle (CV) sales rose by 15%, reflecting steady infrastructure activity and pre-election logistics demand. Tractor sales were up 14%, while three-wheelers grew by 9%. The only laggard was the construction equipment (CE) segment, which declined 24%.<\/span><\/p>\n

\u201cThe GST rationalisation gave the market a psychological push, especially in entry-level segments,\u201d said FADA President Manish Raj Singhania. \u201cCoupled with new launches, improved availability, and widespread promotional schemes, the result was a record festive season.\u201d<\/span><\/p>\n

This marks a turnaround for the PV segment, which had been stagnating earlier in the year due to inventory pile-ups and high financing costs. Compact SUVs and small hatchbacks led the retail momentum, with urban centres contributing a significant share.<\/span><\/p>\n

Industry analysts view the festive rebound as a sign of pent-up demand finally being met, but caution that sustaining this momentum into the final quarter will depend on broader macroeconomic conditions and continued policy clarity.<\/span><\/p>\n

The GST rate cuts came into effect on September 22, so part of the festive sales spike may reflect pre-existing demand. November\u2019s sales data, to be released next month, will better reveal the full impact of the tax cuts.<\/span><\/p>\n

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Smoke Signals<\/b><\/h3>\n

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Moving on from individual stocks or sectors to take a broader picture. Markets are at that strange phase where everyone wants to talk about returns, nobody wants to talk about risk, and the charts all go up, until they don\u2019t. On the one hand central banks are hesitatingly cutting rates, citing need to prop growth. On the other, the stock markets have been flirting with record highs. But some are sending smoke signals.\u00a0<\/span><\/p>\n

Back home, ICICI Prudential Mutual Fund\u2019s Sankaran Naren, the closest thing Indian markets have to a risk-whisperer, has issued what can only be called a polite but firm \u201cplease don\u2019t lose your shirt\u201d advisory. In an interview, Naren says retail investors are carrying the bulk of the risk right now as valuations float away like helium balloons. He isn\u2019t saying the economy is weak or corporate earnings are bad. In fact, he says the macro set-up is good and fundamentals are fine. The problem, he argues, is that someone has to be holding the bucket when the music stops, and increasingly that someone looks like the smaller investor enthusiastically piling into high-priced equities.\u00a0<\/span><\/p>\n

\u201cEveryone wants to buy equities at very high valuations,\u201d he says, lamenting the herd mentality of investing in particular asset class.<\/span><\/p>\n

Thousands of miles away, Jamie Dimon, the CEO of JPMorgan Chase, is singing a surprisingly similar song. His notes though are more high-pitched. Dimon believes the market is dangerously complacent and estimates the chance of a serious market crash is closer to 30%, while investors are pricing it as if there were just a 10% chance. The US market, he warns, is behaving as if every day were a festival of endless gains. High valuations, geopolitical uncertainty, wars, elections, and a technology bubble powered by AI hype are all part of the cocktail. It\u2019s not quite The Big Short sequel, but it’s definitely not The Sound of Music either.<\/span><\/p>\n

Joining this caution chorus is Michael Burry, the legendary contrarian behind The Big Short.\u00a0<\/span><\/p>\n

Burry has flagged stocks like Nvidia and Palantir as bellwethers of an AI-fueled speculative surge, likening the current market fervor to the dotcom bubble of the early 2000s. His concern isn\u2019t about the promise of AI\u2014it\u2019s about the pricing of perfection, where any whiff of narrative is enough to justify soaring valuations.<\/span><\/p>\n

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Market Wrap<\/b><\/h3>\n

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India\u2019s stock markets began November with a weekly loss on profit-taking after a 4.5% surge in October pushed benchmark indexes near record highs.<\/span><\/p>\n

A resumption in foreign outflows also weighed on sentiment, offsetting optimism over corporate earnings and India-US trade negotiations. Foreign portfolio investors offloaded shares worth more than $1.12 billion in the first three sessions of this week after inflows hit a five-month high in October.<\/span><\/p>\n

Both the Nifty 50 and the BSE Sensex dropped 0.9% this week. The small-cap index fell 1.7% while the mid-cap index was flat. As many as 12 of the 16 major sectoral indexes ended the week lower.<\/span><\/p>\n

Among sectoral indexes, consumer durables slid 2.6% as Amber Enterprises and Whirlpool of India posted weak results. State-run banks gained 2.1%, lifted by State Bank of India after it topped earnings estimates.<\/span><\/p>\n

Aditya Birla Group companies Hindalco and Grasim were the biggest losers this week. Hindalco lost nearly 7% after saying a fire at the New York plant of its Novelis unit could hit its 2026 cash flow by up to $650 million.<\/span><\/p>\n

Grasim slipped 6.6% during the week after Rakshit Hargave, the CEO of its paints business Birla Opus, resigned to join biscuits maker Britannia. Meanwhile, Asian Paints rose 4.1%.<\/span><\/p>\n

Power Grid Corp, Maruti Suzuki, Adani Enterprises, ITC, Larsen & Toubro, and Zomato parent Eternal were the other major laggards.<\/span><\/p>\n

Among gainers, non-bank lender Shriram Finance topped the list. Automaker Mahindra & Mahindra came second, adding 5.8% after its quarterly profit surged. HDFC Life Insurance, Bajaj Finance, SBI Life, Bajaj Finserv and SBI were the other major gainers.<\/span><\/p>\n

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\"FD_Kuvera\"<\/p>\n

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Earnings snapshot<\/b><\/h3>\n

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