GROWW - Billionbrains

📊 NSE: GROWW 🏢 Stockbroking & Allied 📅 Last Updated: 11/13/2025 15:25

💰 Financial Performance

Revenue Growth by Segment

Revenue from operations declined 9% YoY in Q2 FY26. Product revenue mix shifted with Stocks increasing by 4pp, Margin Trading Facility (MTF) increasing by 4pp, and Interest-based income (led by LAS) increasing by 2pp, while Derivatives share decreased by 10pp. Revenue per broking order grew 10% YoY from INR 18.0 to INR 19.8.

Geographic Revenue Split

Not disclosed in available documents; however, the company operates as a pan-India digital platform with 11.9 million NSE active clients.

Profitability Margins

Profit After Tax (PAT) margin was 44% in Q2 FY26, showing a 4.1pp expansion QoQ. PAT grew 12% YoY, primarily aided by the reversal of a one-time long-term incentive provision of INR 159.3 Cr from previous quarters.

EBITDA Margin

The company utilizes Adjusted EBITDA Margin as a key metric, though the specific percentage for Q2 FY26 is not explicitly stated. Management notes that 90% of costs are indirect, allowing incremental revenue to flow directly to the bottom line, improving leverage as revenue outpaces costs.

Capital Expenditure

The group has deployed equity investments of over INR 1,700 Cr in subsidiaries as of March 2025, including INR 568.9 Cr in Groww Invest Tech (GIT), INR 678.2 Cr in Groww CreditServ (GCS), and INR 349.5 Cr in Groww Asset Management.

Credit Rating & Borrowing

ICRA maintains a positive outlook based on a healthy cash buffer of INR 3,016 Cr in unencumbered liquid funds and INR 1,016 Cr net proceeds from the IPO. Borrowing costs for MTF are managed against a lending yield of 14.95%.

⚙️ Operational Drivers

Raw Materials

As a digital platform, 'raw materials' consist of 'Cost to Serve' components: (a) Software, server, and technology costs and (b) Transaction and other related charges.

Import Sources

Not applicable for a digital financial services platform.

Key Suppliers

Not applicable; the company relies on technology infrastructure and exchange connectivity (NSE/BSE).

Capacity Expansion

Current capacity is defined by 11.9 million NSE active clients (down from 13.2 million peak). The MTF book capacity grew 61% QoQ to INR 1,668.3 Cr in Q2 FY26 from INR 1,035.8 Cr in Q1 FY26.

Raw Material Costs

Cost to Serve (technology and transaction charges) and Cost to Grow (marketing) are the primary drivers. Cost to Grow increased 23% YoY to INR 125.3 Cr in Q2 FY26 due to branding activities like KBC and Asia Cup.

Manufacturing Efficiency

Operational efficiency is driven by a software-platform model where 90% of costs are fixed/indirect, leading to high profitability as the user base scales.

Logistics & Distribution

Customer Acquisition Cost (CAC) for H1 FY26 was INR 1,374, a 72.6% increase from INR 796 in H1 FY25, reflecting higher discretionary branding spends.

📈 Strategic Growth

Expected Growth Rate

Not disclosed

Growth Strategy

Growth will be achieved through product diversification beyond broking: scaling the MTF book (currently 0.7% penetration), expanding the NBFC arm (Groww CreditServ) which saw 58% QoQ disbursement growth, and integrating Fisdom to add 3-4% to revenue through AIF, PMS, and insurance distribution.

Products & Services

Stock broking, Mutual Fund distribution, Futures & Options (F&O), Margin Trading Facility (MTF), Personal Loans, Loan Against Shares (LAS), Loan Against Mutual Funds (LAMF), Commodities, and Bonds.

Brand Portfolio

Groww, Groww Credit, Fisdom (Finwizard Technology).

New Products/Services

Launched Commodities, Bonds, and '915' product; Fisdom acquisition expected to contribute 3-4% to total revenue operations.

Market Expansion

Focusing on deepening penetration within the existing 11.9 million active client base for credit and wealth products.

Market Share & Ranking

Groww is India's largest investing platform by active NSE clients (11.9 million), despite a recent 9.8% decline in active users in line with industry trends.

Strategic Alliances

Acquisition of Finwizard Technology (Fisdom) completed in October 2025 to bolster wealth management and advisory services.

🌍 External Factors

Industry Trends

The industry is seeing a shift from F&O to cash/MTF due to regulatory tightening. Total NSE active users fell from 50.2 Mn to 45.3 Mn (9.7% decline) in 2025, reflecting a cooling period in retail participation.

Competitive Landscape

Intense competition from traditional brokers and other fintechs, particularly in MTF pricing where competitors offer rates as low as 7.99% compared to Groww's 14.95%.

Competitive Moat

Moat is built on a massive user base (11.9 Mn active) and a low-cost digital-first delivery model. Sustainability depends on successfully cross-selling credit and wealth products to reduce dependence on volatile F&O brokerage.

Macro Economic Sensitivity

Highly sensitive to capital market cycles; 90% of Net Operating Income is derived from retail broking, making revenue vulnerable to market volatility.

Consumer Behavior

Shift toward 'high-quality' users who place more orders; average order per user grew 10-20% despite a decline in total active user count.

Geopolitical Risks

Indirect impact through global market volatility affecting Indian capital market volumes and investor sentiment.

⚖️ Regulatory & Governance

Industry Regulations

Impacted by SEBI's 'true-to-label' circular which reduced F&O revenue per order, uniform exchange charges, and increased STT (Securities Transaction Tax) which impacts trading volumes.