Groww: How the 'Worse' Customer Won
The Puzzle
Here is a question that should bother anyone who follows India’s brokerage industry: How did Groww, a platform built on first-time investors doing ₹500 SIPs, end up more valuable than Zerodha, the company that invented India’s discount brokerage model and dominated F&O trading for a decade?
In FY23, Zerodha’s revenue was ₹6,875 crore. Groww’s was ₹1,294 crore. Both had roughly the same number of active users, around 6.5 million. Zerodha was making over five times the money from an almost identical user count.
Three years later, Groww is India’s largest broker by a factor of two. Its stock has nearly doubled since listing. Its MTF book has tripled in a single year. And Zerodha and Angel One are both losing active clients.
The conventional explanation is regulatory luck: SEBI squeezed F&O, and Groww was less exposed. That is partially right and mostly incomplete. The real answer is more structural, and more interesting, than that.
Let me walk through the numbers.
Two Companies, Two Theories of the Customer
To understand why Groww is where it is today, you have to understand the strategic bet it made back in 2020-2021, and why it looked like the wrong one.
Zerodha’s model is the high-ARPU play. Urban, educated, active traders, concentrated in metro cities. These users trade F&O contracts, generate high brokerage per order, and are the most profitable customers in the Indian brokerage industry on a per-user basis. Zerodha built Kite, the best trading terminal in the country, precisely to attract and retain these people. It worked brilliantly. By FY23, Zerodha had ₹2,907 crore in net profit on ₹6,875 crore in revenue. A 42% profit margin. No outside funding required.
Groww’s model is the inverse. Low-ARPU, high-volume, first-time investors. The 22-year-old in Indore opening a demat account for the first time. The salaried professional in Coimbatore starting a ₹2,000 SIP. As of FY26, 84% of Groww’s transacting users come from outside India’s top six cities. The platform covers 97% of Indian pin codes. It has brought 15.8 million first-time investors into the capital markets.
In FY23, this looked like a charity operation compared to Zerodha. Groww made ₹73 crore in profit on ₹1,294 crore in revenue. The revenue per user was a fraction of Zerodha’s. The conventional wisdom in fintech circles was simple: Groww has users, Zerodha has money.
That framing was correct in FY23. It is completely wrong in FY26. The question is what changed, and whether it will last.
*Q1 FY27 annualized run-rate (₹1,501 Cr × 4). Actual full-year will vary.
Source: Groww Annual Reports, Zerodha Annual Report FY23
The Financial Snapshot
Before we get into the story, here are the numbers. Every figure in this table gets referenced in the sections that follow.
| Metric | Value | Period |
|---|---|---|
| Market Cap | ~₹1.20 lakh crore | Aug 2026 |
| Share Price | ₹191-192 | Aug 2026 |
| 52-Week Range | ₹112 - ₹227.20 | Aug 2026 |
| P/E Ratio | ~49x | TTM Aug 2026 |
| FY25 Revenue | ₹4,062 crore | Full Year |
| FY26 Revenue | ₹4,645 crore (+19% YoY) | Full Year |
| Q1 FY27 Revenue | ₹1,501 crore (+66% YoY) | Quarter |
| Q1 FY27 EBITDA Margin | 64.6% | Quarter |
| FY25 PAT | ₹1,824 crore | Full Year |
| FY26 PAT | ~₹2,000+ crore | Full Year |
| Q1 FY27 PAT | ₹735 crore (+94% YoY) | Quarter |
| Equity F&O % of Revenue | ~55% (FY26) | Down from ~68% in FY24 |
| MTF Book | ₹3,775 crore (3.6x YoY) | Q1 FY27 |
| Total Customer Assets | ₹3.0 lakh crore | Q3 FY26 |
| Active NSE Clients | 1.31 crore (28.72% share) | Jun 2026 |
| Non-Metro Users | 84% of transacting base | FY26 |
| SIPs Facilitated | 204.7 million | FY26 |
| EPS (FY26) | ₹2.61 | Full Year |
| Shares Outstanding | ~623.9 crore | FY26 |
Source: Groww Annual Report FY26, NSE filings, exchange data
That is a lot of numbers. The interesting ones are not the growth rates. The interesting ones are the ratios and the sources. Keep the 55% F&O figure, the MTF book, and the 64.6% EBITDA margin in mind. They are the engine of the story.
The Stress Test
On October 1, 2024, SEBI published its revised framework for equity index derivatives. The changes were substantial and targeted directly at the F&O frenzy that had consumed Indian retail investors.
Three things happened simultaneously:
Lot sizes went up. The minimum contract value for index derivatives was raised from ₹5-10 lakhs to ₹15-20 lakhs. The Nifty 50 lot size tripled from 25 to 75. Overnight, the cost of a single options trade jumped by 3x.
Weekly expiries were capped. SEBI restricted each exchange to offering weekly contracts on only one benchmark index. This killed the Banknifty/Nifty/Finnifty multi-expiry arbitrage ecosystem that many retail traders depended on for daily income.
Premium collection rules tightened. Upfront collection of option premiums, removal of calendar spread benefits on expiry days, and enhanced intraday position monitoring. Every measure designed to raise the barrier to entry.
The effect was immediate. In the first half of 2025, the top four discount brokers (Groww, Zerodha, Angel One, Upstox) collectively lost nearly 2 million active investors. Groww’s own active base, which had peaked at roughly 13.9 million, pulled back to around 12 million before recovering to 13.1 million by June 2026.
Here is the puzzle: active users dropped, the most profitable trading segment was structurally constrained, and yet Groww’s revenue and profit accelerated through this period. Q4 FY26 revenue was up 88% year-on-year. Q1 FY27 PAT nearly doubled.
Something else was covering the gap.
F&O Revenue Under the Microscope
To understand the offset, you first need to understand the hole it was filling.
Equity F&O has historically been the single largest revenue contributor for Indian discount brokers. For Groww, it was roughly 68% of revenue in FY24. Even though Groww’s user base skews toward SIP investors, the math of brokerage economics is unforgiving: an active F&O trader paying ₹20 per order across 30-50 trades a day generates more daily revenue than a hundred SIP investors combined.
So when SEBI’s framework hit, the expectation was straightforward. Fewer traders, fewer trades, less revenue. Every analyst covering the brokerage sector modeled a 20-30% revenue hit.
What actually happened is more nuanced. F&O’s share of Groww’s total revenue fell from roughly 68% in FY24 to approximately 55% by FY26. That is a 13-percentage-point decline in contribution. But the absolute F&O revenue did not collapse proportionally, for a specific reason: commission is not linear with volume.
When lot sizes triple, the notional value per trade goes up, and so does the brokerage per transaction. Volume fell (fewer retail participants), but revenue per trade rose (larger contracts). The net effect was a decline, but a shallower one than the volume drop would suggest. If volumes fell 35-40%, F&O revenue likely fell only 15-25%.
FY28E = management guidance / analyst estimates. Actual mix will vary.
Source: Groww earnings disclosures, analyst estimates
As of Q1 FY27, F&O revenue appears to have stabilized at a new lower base rather than continuing to slide. The quarterly run-rate suggests the worst of the SEBI impact is priced into the current operating model. The 55% contribution figure is probably close to the new structural floor, unless SEBI introduces further restrictions.
The more important observation is not the floor. It is what filled the gap.
Decomposing the Offset
Three things happened while F&O was shrinking. Each one needs to be examined for durability, not just size.
1. Revenue Grew Faster Than Expenses
This is the most underrated part of the Groww story. Total expenditure for Q4 FY26 was ₹599 crore, a 38% increase year-on-year. But revenue grew 88% in the same quarter. That means the operating margin expanded significantly without any headline “cost-cutting” program.
Groww has not slashed costs in absolute terms. It has done something harder: it has grown revenue faster than costs are rising. Marketing spend (what management calls “Cost to Grow”) has actually declined as a percentage of revenue, even as absolute new user acquisition continues. The platform is acquiring customers more cheaply now than it was two years ago, partly because brand awareness in non-metro India has reached the point where organic acquisition supplements paid channels.
Durability rating: High. Operating leverage in a platform business is structural, not cyclical. Once the infrastructure is built, each incremental user costs very little to serve. The Q1 FY27 EBITDA margin of 64.6% is not a one-quarter aberration. It is the natural margin profile of a scaled digital platform.
2. MTF Book: Tripling to ₹3,775 Crore
This is the most aggressive new revenue lever. Groww’s Margin Trading Facility (MTF) book has scaled from ₹1.3 billion in Q1 FY25 to ₹3,775 crore (₹37.75 billion) in Q1 FY27. That is roughly a 29x increase in two years. The number of active MTF users went from 10,000 to 78,000 in the same period.
MTF is essentially a lending product: Groww lends money to customers to buy stocks on margin, charging interest on the borrowed amount. Management has guided for a ₹7,000 crore book by FY28, with interest income growing from roughly ₹48 crore in FY25 to an estimated ₹900 crore by FY28.
The revenue quality is genuinely different from brokerage. MTF income is interest-based and therefore more predictable and recurring than transaction-based brokerage fees. It also does not depend on SEBI’s F&O regulations. It is a lending business embedded inside a brokerage platform.
Durability rating: Moderate-to-High, with a caveat. The caveat is credit risk. A 29x increase in a lending book in two years is exactly the kind of growth trajectory that, in other financial sectors, has preceded credit blowups. If the equity market corrects 20-30%, some of those margin positions will be liquidated, and Groww will face NPAs on its lending book. The industry-wide MTF book hit ₹1.16 lakh crore in April 2026 before a sharp pullback during the March correction. Groww’s book is small relative to industry, but growing fast. The risk is real and under-discussed.
3. Fisdom, AMC, and the Wealth Layer
In October 2025, Groww completed a $150 million all-cash acquisition of Fisdom, a wealth management platform targeting affluent and HNI clients. In June 2026, SEBI approved State Street Global Advisors taking a 22.94% economic interest in Groww AMC.
Groww’s AMC focuses on passive products (index funds, ETFs), which aligns with the platform’s “SIP-first” DNA. Total customer assets on the platform reached ₹3.0 lakh crore by Q3 FY26. For context, the ETF industry in India has grown from practically nothing to ₹8.5 trillion, and Groww is among the largest distributors.
Durability rating: High for distribution, early-stage for AMC. The mutual fund distribution revenue is annuity-like and grows with AUM, which compounds with market returns and fresh inflows. The AMC is still nascent. The State Street partnership signals institutional validation, but Groww AMC’s AUM is not yet large enough to move the needle on consolidated financials. Give it two to three years.
The Re-Rating: From Broker to Platform
At IPO in November 2025, Groww was priced at ₹100 per share. At the upper band, the market cap was roughly ₹61,700 crore. Based on FY25 earnings of ₹1,824 crore, the implied P/E was approximately 30-34x.
Today, the stock trades at ₹191. Market cap: ₹1.20 lakh crore. P/E: roughly 49x.
The stock has nearly doubled from the IPO price, and the P/E has expanded from ~30x to ~49x. That expansion is the market’s answer to the question: is Groww a stockbroker, or is it a financial platform?
A stockbroker trades at 12-18x earnings. Angel One and ICICI Securities trade in this range. These are transaction-dependent businesses with limited pricing power.
A financial platform, one with distribution, lending, asset management, and a user base that is still growing, trades at 35-55x. That is where Groww sits today.
What justified the re-rating was not any single quarter’s earnings beat. It was the demonstrated ability to offset the F&O revenue decline with MTF lending and expense discipline. The market watched Groww absorb a structural regulatory blow to its largest revenue segment and come out the other side with higher profits. That changed the narrative.
The risk to the multiple is straightforward: if MTF credit quality deteriorates, or if SEBI introduces further restrictions that erode the new revenue streams, the market will re-rate Groww back toward the broker multiple. The premium is rented, not owned. It requires continued proof.
The Competitive Landscape
Total active accounts: 4.42 crore
Groww's active client base is nearly 2x the combined count of Zerodha + Angel One
Source: NSE Active Client Data, June 2026
As of June 2026, Groww holds 28.72% of all active NSE accounts, with 1.31 crore active clients. Zerodha has 68 lakh (14.96%). Angel One has 66.3 lakh (14.59%). The combined active base of Zerodha and Angel One is still smaller than Groww’s alone.
More critically, Groww is gaining share while the incumbents are shrinking. In June 2026, both Zerodha and Angel One lost net active clients. Groww was one of the few platforms adding users. The reason connects back to the business model: Groww’s user base is weighted toward long-term investors and SIP participants, who are less likely to churn when F&O regulations tighten. Zerodha’s user base, weighted toward active traders, is more exposed to regulatory-driven attrition.
But the landscape is not consolidating. It is reshuffling. Look below the top three:
Dhan has crossed 10.7 lakh active clients with 2.36% market share and was third in net client additions in March 2026. It is building a high-speed, options-first platform that targets exactly the active trader segment that Zerodha is losing.
Sahi, founded in 2023 by Swiggy’s former CTO, entered the top 20 brokers for the first time in June 2026. It recorded the highest net client additions in the entire industry that month. An AI-native trading platform built from scratch.
This is the pattern. The category was reshuffled once when Zerodha disrupted full-service brokers. It was reshuffled again when Groww out-acquired Zerodha in non-metro India. There is no reason it cannot be reshuffled a third time. Today’s leader is tomorrow’s incumbent. The question is not whether Groww is ahead (it clearly is), but whether the moat is wide enough to stay ahead when the next wave arrives.
Groww’s competitive advantage is distribution depth (97% pin code coverage, 84% non-metro), brand recognition among first-time investors, and the network effect of 204.7 million SIPs running through the platform every year. Those are real barriers. They are not insurmountable ones.
Three Metrics, Going Forward
If you are tracking Groww as an investor or an observer, the financial statements contain a lot of noise. Here are the three numbers that matter, and they are all ratios, not growth rates.
1. EBITDA Margin Trajectory. Q1 FY27 printed 64.6%. If this holds above 60% across FY27, the platform-economics thesis is confirmed. If it dips below 55%, it means Groww is spending to defend market share, which is a different, less profitable story. Watch for quarters where marketing spend spikes without proportional revenue growth.
2. MTF Book as a Percentage of Broking Revenue. The MTF book is ₹3,775 crore and growing fast. The relevant question is not the absolute size. It is how much interest income the MTF generates relative to total broking revenue. If MTF interest income crosses 20% of total revenue by FY28, the revenue mix is genuinely diversified. If it stays at 12%, the diversification narrative is weaker than the headline number suggests. And watch the credit quality closely. A fast-growing lending book in a rising market is easy. The test comes when the market corrects.
3. Revenue Share of New Lines, Not Growth Rate. Fisdom, Groww AMC, commodity derivatives, personal loans, wealth management. These are all growing from small bases, so the growth percentages will look spectacular (200%, 300% year-on-year). Ignore the growth rate. Look at what percentage of total revenue these segments represent. If new lines collectively cross 15% of revenue by FY28, Groww has successfully diversified away from its dependence on equity brokerage. If they are still at 8-10%, the company is a broker with side projects, regardless of how fast those side projects are growing.
No buy/sell recommendation here. Just the math. The numbers are public, the quarterly filings are timely, and the story is still being written.
Pankaj, signing off. The “worse” customer was never worse. They were just patient.
Frequently Asked Questions
What is Groww’s revenue for FY26?
Groww reported operating revenue of ₹4,645 crore for FY26 (+19% YoY). Q1 FY27 accelerated further to ₹1,501 crore (+66% YoY), putting the annualized run-rate above ₹6,000 crore. Net profit for FY26 crossed ₹2,000 crore, with Q1 FY27 alone contributing ₹735 crore.
How did SEBI’s F&O regulations impact Groww?
SEBI’s October 2024 framework tripled lot sizes and capped weekly expiries. Groww’s active base dipped from ~13.9M to ~12M before recovering. F&O revenue share fell from ~68% to ~55%, but the impact was softer than expected because commission per trade rose with larger contract sizes. Revenue and profit continued to grow through the regulatory transition.
What is Groww’s market share among Indian brokers?
Groww holds 28.72% of all active NSE accounts (1.31 crore clients) as of June 2026. This is nearly double the combined active base of Zerodha (14.96%) and Angel One (14.59%). The total industry has 4.42 crore active NSE clients.
What is Groww’s P/E ratio and how has it changed?
Groww’s P/E has re-rated from ~30-34x at its November 2025 IPO (₹100/share) to approximately 49x as of August 2026 (₹191/share). This expansion reflects the market re-classifying Groww from a “discount broker” to a “financial platform” following its demonstrated ability to offset F&O revenue declines with MTF lending and margin expansion.
How is Groww building its MTF lending business?
Groww’s MTF book grew from ₹1.3 billion in Q1 FY25 to ₹3,775 crore in Q1 FY27. Active MTF users grew from 10,000 to 78,000 in the same period. Management targets a ₹7,000 crore book by FY28. The key risk is credit quality during a market downturn, as margin positions can face forced liquidation.
