IPO-bound Groww leans on wealthier clients, diversification to offset derivatives slowdown

Groww diversifies to ride out of a choppy market

Groww, the country’s largest investment platform by active users, has filed for Rs 6,000-7,000 crore IPO, of which Rs 1,060 crore will be raised as primary capital for investment in growth.

One of the most closely watched IPOs in the Indian startup ecosystem, Groww sets itself apart with a net profit margin of around 45 percent. The company reported a 3x growth in net profit at Rs 1,824 crore during FY 25, while revenue grew 31 percent to 4,056 crore.

While most brokers have seen revenue plummet 20 percent due to regulatory crackdowns on derivatives trading, Groww has charted a different course. The country's largest investment platform by active users has successfully diversified away from its reliance on Futures and Options (F&O) trading, pivoting toward wealthier customers and systematic investment plans, which has helped it report decent numbers during the June quarter of FY 26.

The Bengaluru-based firm reported Rs 378 crore as net profit during Q1FY26, which is an increase of 11% on year. However, the company's revenue for the period stood at Rs 904 crore, a 10 percent decline from Rs 1,000 crore the company reported in Q1 FY25.

The growth of wealthy customers

Thanks to the increasing diversification and the adoption of the platform by wealthier customers, Groww managed to increase the average revenue per user to Rs 3,339 in FY25, compared with Rs 2,520 in FY 23.

As of June 30 quarter of FY 26, affluent users (those with more than Rs 25 lakh in assets) contributed 33 percent of total customer assets, up from 20 percent in FY23.

More than 57 lakh active users on Groww used more than one product, and these users generate higher revenue per user than the average user.

The F & O impact

To be sure, Groww reports almost 50 percent of its revenue from Futures and Options (F & O) or also known as derivatives trading. However, it used to be around 65 percent in FY 23, according to sources.

Sebi has been clamping down on derivatives trading, citing that 90 percent of retail customers lose money in F & O trading. And this has resulted in most brokers seeing a 20 percent decline in revenue and profits.

But Groww has managed to diversify its revenue by onboarding wealthier customers, apart from cross-selling multiple investment products.

Groww has around 18 million active investors, as per internal data, while NSE data shows an active investor base of 12 million. The rest of the customers are using Groww for investing through BSE, trading commodities or buying other wealth-tech products.

Interestingly, even as Groww diversified its own revenue pool, the company’s share in derivatives trading grew to almost 14.5 percent in June quarter of FY 26, compared to 7.6 percent in FY 24, according to research firm Redseer data.

Strong Growwth in mutual funds and SIPs

Started in 2016 and rose through the ranks quickly to become the largest platform for customers to buy Mutual Funds and Systematic Investment Plans (SIPs).

In FY25, Groww contributed to Rs 34,000 crore in SIPs, while the total cumulative inflows of the Rs 2,89,400 crore of the industry (as per Association of Mutual Funds of India or AMFI data), implying that Groww held an 11.76% market share in SIP inflows for the period.

In June 2025, Groww had a 26 percent market share among NSE active clients. The company contributed to a 45 percent share in the net addition of active users for the twelve months from June 2024 to June 2025, as most of the top brokers saw a decline in new user additions. It also contributed to a 26 percent share in new demat account additions.

It is important to note that even Groww has seen a decline in active NSE users from 13 million in December 2024 to 12 million in August 2025. Most of the other brokers also saw a 10 percent decline in active investors since the beginning of 2025.

However, growth in SIPs and the shifting of investor focus from trading to investing has helped Groww reduce the impact of the blow.

As per AMFI data, 6 million new SIPs were created in India in June 2025, while Groww created 2 million new SIPs during the period, implying that around 33 percent of all new SIPs were created on the company’s platform.

Groww had 18.50 percent market share in active SIPs and 16% market share in unique mutual fund investors for June 2025.

The improving financials

The expenses reduced by 23 percent from around Rs 2,068 crore in FY 24 to Rs 1,596 crore in FY25, show data from the updated draft red herring prospectus (UDRHP).

The decline came even as its technology and server expenses shot up by 67 percent to Rs 441 crore in FY 25, from Rs 264 crore in FY 24.

The company’s profitable growth and high net margin have been facilitated by the dramatic decline of almost 74 percent in FY 25. The segment expenses were Rs 315 crore in FY 25 compared to Rs 1,188 crore in FY 24.

The high employee expenses in FY 24 were due to performance-based incentives of Rs 778 crore paid to the company management and a one-time long-term incentive of Rs 106 crore paid out in FY 24.

But the trend of declining employee expenses continued in the June quarter of FY 26 as it saw employee expenses coming down by 45 percent from Rs 248 crore in June FY 25 to Rs 136 crore in FY 26.

Choppy market

However, some challenges remain for the company, with the broader equity marketing slowdown.

For instance, Groww has reported a 10 percent decline in the June quarter revenue.

The company’s additionon of new transacting users during the June quarter came down to 7 lakh in FY 26 compared to 16 lakh new transacting users during the June quarter of FY 25.

However, it was still a growth, albeit slower. Meanwhile, the active derivative traders came down to 14 lakh during the June quarter of FY 26 compared to 19.5 lakhs during the June quarter of FY 25. This is one of the reasons why Groww’s revenue declined during the first quarter.