Financial services firm Groww is poised to surpass 10 million active users in May 2024, driven by heightened activity in the equity markets and a surge in startup initial public offerings (IPOs), sources informed Moneycontrol. This milestone underscores Groww’s dominance in the financial services sector, particularly in the realm of user engagement.
“Groww crossing 10 million active users is due to two main reasons: the platform’s user experience, which is hassle-free, and the significant activity in the primary and secondary markets in recent months,” a source familiar with the development stated.
In September 2023, Groww overtook Zerodha and has since established a substantial lead over its Bengaluru-based competitor, founded by the renowned Kamath brothers, Nithin and Nikhil. As technology-led startups like Zerodha, Groww, and Upstox continue to disrupt the market, they have managed to capture substantial market share from traditional brokers and bank-led broking institutions over the past decade.
A senior executive at a rival brokerage firm attributed Groww’s success to its emphasis on education and investment, differentiating it from more trading-focused competitors.
In April 2024, Groww expanded its market share, capturing nearly a quarter of active investors on the NSE. Meanwhile, other stock brokers experienced slower growth or a decline in their customer bases. Groww’s active investor base reached 9.9 million, reflecting a 77.5% year-on-year increase, according to NSE data. Its market share climbed to 23.4% from 16.5% the previous year. Zerodha’s active user base, in comparison, grew to 7.39 million in April 2024.
Angel One also saw growth, with its market share rising to 15% and an active investor base of 6.11 million, marking a 42% year-on-year increase.
Profitability Dynamics
While Groww leads in market share, Zerodha’s focus on the trading community positions it to remain the largest company by revenue and profit shortly. For FY23, Zerodha reported a 38.5% revenue growth to ₹6,875 crore and a 39% increase in profits to ₹2,907 crore.
Groww, on the other hand, reported a profit after tax (PAT) of ₹448 crore, driven by a 266% year-on-year growth in operating revenue to ₹1,277 crore for the financial year ending March 2023, as per documents from the Registrar of Companies (RoC). Both Groww and Zerodha, being privately held, will disclose their FY24 financials later this year.
While Groww has achieved profitability, industry experts question the sustainability of these profits amid the company’s efforts to shift its domicile back to India. Last week, Groww’s cofounder Lalit Keshre announced on X that the company completed the process of relocating its holding company’s domicile from the US to India. However, the tax liabilities incurred from merging its US holding company, Groww Inc, with the Indian entity, Billionbrains Garage Ventures, are expected to impact the company’s bottom line.
“Unlike Zerodha, Groww faces pressure to ensure returns or exits for its early investors, potentially leading to an IPO within the next couple of years,” a fintech consultant familiar with Groww’s operations commented. “With India emerging as an attractive IPO market, Groww’s registration in India is strategic, aiming for public market valuations previously attainable only in the US.”
This strategic move highlights Groww’s adaptability and ambition to lead the transition in the financial services sector, leveraging its user base and market presence to navigate the evolving investment landscape.
