Wanted valuations to be relevant to the industry, not absurd: Harsh Jain, Co-founder & COO, Groww

Wanted valuations to be relevant to the industry, not absurd: Harsh Jain, Co-founder & COO, Groww

Groww co-founders Harsh Jain and Ishan Bansal are confident that short-term disturbances such as SEBI’s draft circular, published earlier this week, wouldn't affect the company’s long-term runway. Speaking to Moneycontrol, just ahead of Groww's IPO launch next week, they clarified that the draft proposals would have no bearing on their company. Jain, the company’s COO, said he isn’t worried about the evolving regulatory landscape. Bansal, Groww’s CFO, explained that the dip in revenue seen in June FY26 quarter is as a result of weak stock market performance that persisted till most of September this year.

Edited excerpts:

Diversification of business seems to Groww’s core strategy going by your DRHP. Is it a fair assumption to make?
Harsh Jain: In the last two years we observed that a lot of people on our platform could transitioned to ‘affluent’ customers. In the last 2 – 3 lot of HNI customers also started using our platform. These customers have incremental needs than just what we had to offer such as PMS and AIF products and they need some advisory. That’s why we made the acquisition of Fisdom as it was the gap on our platform and we wanted to build it. And building a product takes time; we may take our time, be late, but we want to do best in India. For instance, we just commodities on our platform, but we started working on it last year. It took us one year.

You would like to be recalled beyond broking…
Jain: We've been diversifying naturally. On a platform, we keep adding products wherever we see a demand. For example, ETFs used to be a less popular product, so was bonds. But when demand started coming in we started launching ETF products and then it became very popular. At the back-end it’s a broking product, but for a customer it's a different product whether bonds or ETFs. Diversification gives us string resilience.

What was your trigger for diversification?
Jain: We came from Flipkart and imagine if Flipkart only sold books, customers won’t get value. When we started, we spent good amount of time in building just the first product which was mutual funds. We didn’t come from the industry, we were outsiders. We realized soon that it was our strength, because we were not limited to what was happening in the industry. That helped our thinking align with customers’ requirements. Now we are building a different platform called 915.trade which is a very niche product for hardcore traders and that’s automatically diversifying. Once you start building products, it makes the platform more resilient, because there is a customer segment which is sticky with you and they're not churning. They bringing fresh customers just for that category. With each product our ARPU (average revenue per customer) grows and from a customer value point also the platform becomes resilient.

Ishan Bansal: Our overall retention is about 80% and two product retention is more than 90%. People don't go once they start using more than one product. Most of the customers wallet share from a wealth perspective is with Groww and it becomes like a core part of their life.

What explains the plateauing of revenues in Q1 FY26, whereas the net profit growth was still very strong?
Bansal: Revenue growth from a quarterly perspective could be prone to some variations. We expect the past growth rates seen in FY23 – FY25 to continue in the long term, but there will be volatility in that growth. We are a capital market company. If capital markets are not doing well, we will also take a hit on revenue. NSE active customers number also has taken a hit relatively. But it's a like a positively biased volatility.

Do you see more room for operating leverage to kick in?
Bansal: Most of our cost is fixed in nature. Increase in cost is largely because of inflation in employee cost etc. Whenever revenue grows faster than costs, our leverage improves. For instance, we have launched commodities and now there is no variable cost for us on that product.

Yesterday, we saw broking and AMC stocks take a hit because of SEBI’s draft circular. Once you get listed, you will be susceptible to these events. How do you see this risk?
Bansal: Most of our revenue is independent of mutual fund, so that’s not a risk. Likewise, we don’t do institutional business. Both of these have no direct impact on our business.

Jain: Regulations will keep coming, but from a longer term perspective, it doesn’t matter. There may be dips which can be covered it in few days. There should be a strong conviction that overall capital market will grow in India, and I believe that is the case.

Are you comfortable putting yourself up for public scrutiny once listed?
Jain: One thing core to Groww is transparency. I don't think we fear the scrutiny of what we are doing. Each one of us has spent almost 20 years plus in the market as an investor. The reason we came together and built Groww is because we think that internet and consumer space holds a lot of promise. I think we over index the fear of a single day stock price movement.

From a distributor model, do you plan to ever be a manufacturer of products?
Jain: In a very small way we are manufacturers of products because we have our own AMC. But a large part of our business will be distribution.

Your valuations seem reasonable when seen against peers in the listed space. How did you arrive at these multiples?Bansal: We went through one round of fundraising about six months back where we arrived at a valuation benchmark. We met a lot of investors across the world and got their feedback. What we wanted was that maximum number of investors who are relevant for our kind of business and believe in our vision should invest in us.

Jain: Not too much of science or creativity should be done on the IPO pricing, because the next moment after listing, you will not have any control on pricing. It is market dependent, no matter what you think about your company. We wanted it (valuations) to be relevant to the industry, not be absurd.