IPO-bound Groww enables captive algo trading with 'Groww Cloud'

Groww launches in-app algo trading

Groww, India's largest stockbroker by active client base, has enabled captive algorithmic trading under its Groww Cloud platform, according to two people aware of the development.

The launch of the platform comes after the markets regulator Securities and Exchange Board of India (SEBI)’s mandate earlier in August to run the algorithm trading within the brokers’ platform.

Earlier, most traders used algorithmic platforms to place orders while connected to a broker through application programming interface (APIs). Only brokers are regulated by SEBI, and hence the direction to run algo trades within the brokers’ platform.

The Bengaluru-based wealth-tech platform’s launch focussed on the trading community, coming ahead of its Initial Public Offering, which could value the startup at around $7-8 billion.

“Groww Cloud will allow algorithmic traders to deploy and run their strategies directly on the broker’s infrastructure, ensuring inherent regulatory compliance and stability,” one of the sources said on condition of anonymity.

Groww did not respond to Moneycontrol queries on Groww Cloud and its impact or implications.

The platform features a web-based code editor, eliminating the need for traders to manage complex setups and external servers, which could have raised compliance issues otherwise, the second source added.

Trader focus

Even as SEBI has been curbing derivatives trading to protect retail investors, the segment is key to the broking industry in revenue.

In July, the company launched a new trading terminal called 915 exclusively aimed at high-volume traders. Available on the web and hosted outside the Groww app, the platform enabled customers to customise their unique dashboards based on their trading styles and data resources.

In August, Groww launched an Artificial Intelligence (AI) model that will enable customers to let the agentic assistant do the research, analysis and make investments based on their risk profile.

One of the fastest trades

According to Openbroker.in, of late, Groww has reduced its order execution latency to a median of 40 milliseconds, offering institutional performance to its retail user base.

“This is a critical differentiator for algo traders, especially those engaged in high-frequency strategies like options trading. This will reduce Groww’s dependency on third-party tech vendors in a high-margin segment. The technology determines the winner in trading, not distribution,” an analyst, who used the platform, said.

Key IPO details

Groww is expected to announce the IPO price band soon and is looking to raise between Rs 6,000-7,000 crore, with Rs 1,060 crore in primary capital and Rs 5,000-6,000 crore as an offer for sale by existing investors. The company, registered as Billionbrains Garage Ventures, is likely to list in November.

Groww is one of India’s most profitable new-age startups, reporting a net profit of Rs 1,819 crore in FY25.

Even as most brokers in the country struggled after the regulatory curbs, Groww reported an 11 percent growth in net profit during the June quarter of the current fiscal at Rs 378 crore.

According to its updated Draft Red Herring Prospectus, the company has an 80 percent organic customer acquisition and a 77 percent three-year user retention rate. The company boasts an industry-high contribution margin of 85 percent and a net profit margin of 45 percent.

Early investors to exit

Early investors like Peak XV, Y Combinator, Ribbit Capital, and Tiger Global are expected to sell shares in the IPO. Groww's founders, who hold a 26.64 percent stake, plan to offload only 0.07 percent of the total shares, with a 20 percent lock-in for 1.5 years from the listing date.

The company recently completed the acquisition of wealth management firm Fisdom after SEBI's approval, a move expected to expand Groww’s wealth offerings. Groww has also expanded its product portfolio to include wealth management, Margin Trading Facility (MTF), commodities, and loans against shares, diversifying its revenue base and cushioning it from market fluctuations.

Navigating regulatory headwinds

The IPO process for Groww is unfolding during a challenging period for most brokers, as new regulations have impacted the industry. Broking firms are facing higher taxes on trading, lower exchange rebates, and stricter restrictions on retail Futures & Options (F&O) trading since late last year. This has led to a decline in active investors for most top brokers for several consecutive months in 2025.

Despite these headwinds, Groww's diversified product offerings and strong customer base are expected to mitigate potential setbacks. In June 2025, Groww held a 26 percent market share among NSE active clients and contributed to a 45 percent share in the net addition of active users from June 2024 to June 2025.

The company also accounts for approximately one out of three new Systematic Investment Plans (SIPs) started in India, holding an 18.50 percent market share in active SIPs.

The recent F&O expiry has seen significant activity in both Nifty and Bank Nifty options, with varying put-call ratios indicating market sentiment. The broader market sentiment, coupled with regulatory changes, has impacted the profitability of several broking firms, with some experiencing a 20-30 percent drop in revenues and profitability since Q4 of FY25. However, Groww's strategic focus on technology and diversified offerings positions it to navigate these challenges effectively.