Groww largest brokerage by clients, but valuations on higher side compared to peers

Online investment platform Groww has opened its Rs 6,632-crore issue for public subscription today, November 4. The issue has caught the eye of investors as Groww is the largest brokerage in India by active clients on the National Stock Exchange (NSE). However, while it fares well on client size and user growth, the broker lags on other key financial metrics such as revenue from operations or net profit.

User growth

As of FY25, Groww reported 12.92 million active clients, significantly ahead of long-established broking players such as Angel One’s 7.6 million and Motilal Oswal’s 1 million.

The investment platform also recorded 35.5 percent on-year growth in active clients, higher than key competitors such as Angel One (24 percent) and Motilal Oswal (15.4 percent). Among Groww’s wealth management peers, 360 One WAM, Nuvama Wealth Management, and Prudent Corporate Advisory Services reported slower or negative client growth.

However, despite having the largest number of clients, Groww’s total customer assets stood at Rs 2.16 lakh crore. In its red herring prospectus, the firm noted that total customer assets
“signifies the value of assets held across multiple products and services at the end of period and helps to gauge the wealth held by the customers.”

In comparison, despite having a lower number of active users, 360 One WAM and Motilal Oswal reported Rs 5.81 lakh crore and Rs 5.5 lakh crore in customer assets, more than double that of Groww.

Financial metrics

On the financial front, Groww reported Rs 3,902 crore in revenue from operations and Rs 1,824 crore in profit after tax for FY25. While its revenue trails Angel One (Rs 5,238 crore) and Motilal Oswal (Rs 8,339 crore), it is higher than 360 One WAM and Prudent Corporate Advisory Services.

The firm’s profitability is higher than peers, with a net profit of Rs 2,508 crore for the financial year, boasting of the highest profit margin at 44.92 percent.

Digital-first, bank-led brokers, or wealth managers?

According to Groww’s RHP, digital-first players such as Groww, Zerodha, Angel One and Upstox, have seen stronger revenue growth compared to wealth management players and bank-led brokers. From FY22, digital players have reported 60 percent revenue CAGR, against wealth management firm’s 25 percent and bank-led brokers’ ~23 percent.

Digital-first players led on profitability with a ~42 percent profit after tax margin, surpassing both bank-led brokers (~32 percent) and wealth management players (~29 percent), added the RHP.  Additionally, Groww added that the weighted average user growth has been significantly higher for digital-first players at ~28 percent compared to a ~2 percent figure for bank-led brokers.

Should you subscribe?

With more than 83 percent of user acquisitions between FY23–FY25 being organic, driven by product-led growth and word-of-mouth referrals, Groww has achieved low CAC and high operational leverage.

Further, around 81 percent of its user base comes from Tier-2 and Tier-3 cities, with 45 percent of users below 30, reflecting deep penetration among India’s young investor community, noted experts.

However, at the upper price band, the company is valued at 33.8x FY25 P/E, implying a post-issue market capitalization of Rs 61,736 crore. Some brokerages noted that at current valuations, the IPO does appear fully priced and may not offer strong listing gains. Anand Rathi recommended that investors could subscribe for the long-term.

Among all listed peers, Prudent Corporate Advisory Services commands the highest valuation at 54.08x, followed by 360 One WAM at 39.82x. Motilal Oswal and Nuvama Wealth Management are valued at 23.38x and 25.63x, respectively. Angel One has the lowest valuation in the group at 19.16x.

According to Angel One, at the upper price band of Rs 100 per share, the company is valued at a post-issue P/E of 40.79x, which means the valuation appears to be steep compared to peers. “We assign a “neutral” rating for investors with a long-term perspective,” said the brokerage.

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