Shares of Billionbrains Garage Ventures Ltd, operating as Groww, experienced a significant decline of 7% in Tuesday's trading session. This sharp fall contributed to a cumulative loss of 14.61% over the past five trading days for the Indian fintech platform.
Reasons Behind Groww's Stock Drop
The primary catalysts for today's sell-off appear to be two-fold:
- Anticipated Block Deals: Early investors, including Peak XV, Sequoia, Y Combinator, and Ribbit, were expected to offload a substantial number of shares through block deals. Reports indicated a transaction worth approximately Rs 4,750 crore.
- IPO Lock-in Expiry: A significant portion of Groww's outstanding equity, specifically 418.19 crore shares representing 68%, became eligible for trading from Tuesday following the expiry of the initial public offering (IPO) lock-in period. This influx of tradable shares can increase supply and put downward pressure on the stock price.
Details of the Block Deal
Within the initial 10 minutes of trading, a massive volume of 388 million shares, valued at Rs 7,022 crore, changed hands. The stock hit an intraday low of Rs 180 apiece on the National Stock Exchange (NSE), marking a 6.98% drop from Monday's closing price.
Sources indicated that the selling shareholders aimed to offload 26.84 crore shares, accounting for 4.3% of Groww's total outstanding equity. The deal was reportedly executed at around Rs 177 per share, representing an 8.5% discount to Monday's closing price of Rs 193.52.
Kotak Securities Limited was named as the placement agent for Peak XV, Sequoia, and Y Combinator, while JP Morgan India Private Limited facilitated deals for Peak XV, Sequoia, and Ribbit. The transactions were conducted via vendor sales on the NSE's screen-based trading platform.
Market Context
The recent declines come after Groww shares had already fallen 5.54% on Monday. This sustained selling pressure highlights investor reactions to major shareholding changes and increased liquidity in the market post-lock-in expiry.