Daybreak - Did Groww's profits really triple before its IPO?

Episode Date: November 4, 2025

Groww, the platform that turned stock trading into an everyday habit, is gearing up for India’s biggest-ever broking IPO. On paper, it’s flying high — profits have tripled, revenues have surged past ₹4,000 crore, and competitors like Zerodha and Angel One are feeling the lagging behind.But look closer, and the shine dulls a little. A big chunk of Groww’s recent gains comes from one-time accounting adjustments, while its active user base and broking income are already slowing. To keep the engine running, Groww is betting on a new frontier — lending — even as rivals crowd the same space.Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too? It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

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In September, a surprising IPO listing made the news. No one expected the Anandrati share and stockbroker's listing to trigger any fireworks. After all, the 30-year-old old-school broker isn't exactly the poster child of fintech ambition. And yet, it's almost $750,000. IP's IPO drew bids worth more than 20 times the original offer. The stock did extremely well, especially considering the sluggish market at the time. Now, the stage belongs to another player that changed how India trades. Grow.

The company goes public today and is reportedly seeking a valuation as high as $9 billion. That's the biggest IPO in India's broking space till date. Of course, Grow has put its best foot forward. In its DRHP, it boasts more than 4,000 crore rupees in revenue and nearly 2,000 crore rupees in profit for FY25. That's three times higher than its profits last year. Meanwhile, its biggest competitors like Zarodha and Angel 1 were struggling, thanks to Sabi's crackdown on the FNO or Futures and Options Party. For context, F&O are basically trades where people bet on stock prices rising or falling at a future date.

High value trades of this nature are risky but rewarding for retailers and a big source of revenue for apps like Grow, Zerodha and Angel 1. So when Sebi started introducing stricter rules, Zerotha's annual profit fell about 20% and Angel 1 barely grew. Grow meanwhile seemed to be defying gravity. This was also the year that Grow went all out in diversifying. Beyond its core broken business, Grow now has its fingers in multiple pies,

from mutual funds to payment solutions to lending. It was clear that the discount broker had its side set on becoming a full-blown supermarket for financial services, with a special focus on lending as its big new bed. Except if you look deeper into the maze of numbers and growth IPO documents, you will realize that its stellar performance isn't all that it is made out to be. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Rachel Virgis, and every day of the week, my co-host, Snickta Sharma and I

will bring you one new story that is worth understanding and worth your time. Today's Tuesday, the 4th of November. In the year ended March 24, Groh incurred a significant tax expense, which amounted to $1,500 crore rupees. This happened because the company shifted its domicile or legal base from the US to India. You see, moving countries like that means you often have to settle large tax obligations. What also happened was that Grope paid a one-time performance incentive of nearly 800 crore rupees and a long-term incentive of a little about 100 crore rupees to its top management during the year. This, along with other staff costs, quadruples gross employee expenses in F-524, which directly affected its bottom line.

Now, if it weren't for these costs, the company would have actually made a profit of over 1,400 crore that year. This was as opposed to the little more than 800-crow-rupes loss it actually ended up posting. But in FY25, the long-term incentive of 100-crow rupees was cancelled and reversed, which of course added to gross profit. Basically, if not for this, the company's bottom line would have come in lower at about 1,700 crore rupees. Now, on paper, even with that change, gross profit growth in FY25 would still have been about 20. Except, even if it was still outpacing its peers, the difference would not have been quite as dramatic. So, overall, the dream run in trading volumes, that is, until Seby's squeeze on the F&O business began in late

2024, meant that FY25 was spared the worst of the blues. But the full impact of this move and other tightening regulations is expected to manifest in the current year ending in March 26. The hit has already started to show in the June 2025 quarter for Zerodha, which saw a 40% plummet in brokerage revenues. Even Angel 1 saw its sales fall about 20% year-on-year, with profit falling even more. From the looks of it, Grow managed to dodge the trend

by growing its profits 12% year-on-year to almost 400 crore rupees during the same period. But there's another one-off questioning the blow here as well. The reported profit of a little more than 300 crore rupees for the June 2024 quarter was dragged down by a long-term incentive of almost 160 crore rupees to the top management. That was an amount that was reversed in the same year. If not for that reversal, gross profit for that quarter would have been nearly 500 crore rupees, which in turn would mean that the company posted a 25% decline in profit in the June 2025 quarter.

And it's not just profit. gross sales too fell about 10% from the year before. The main issue? Broking income. It was down by nearly 20% thanks to weaker trading volumes and fewer new investors joining the platform. In fact, new active users nearly halved from a little short of 2 million a year ago

to less than a million this June. Still, broking accounts for a big chunk of growth's overall revenue. But its share has been declining, continually. A year ago, the segment contributed 90% to the company's top line. In June 2025, it dropped below 80%. So, Grow's strategy to try and make up for the slowdown in the broking business, even if it is marginally, are other verticals, which include everything else the company has bet on. More on this in the next segment. In early October, Grow got the green light to buy FISD, a wealth tech startup. This move officially opened the door for Grow to

enter the wealth management game through its unit called W, which focuses on serving the rich. Now, while Grow has also been experimenting with other businesses like asset management, payments and insurance broking, they are all still pretty small. One segment that's really taken off though is lending. You see, grows income from loans and MTF or margin trading, which is basically when traders borrow money to buy more stocks, grew by almost 10 times in FY25. Then later, it more than doubled in the June quarter. So clearly, Grow is stepping on the lending accelerator. From its over 1,000-crowd-rupe's IPO issue,

over a third has been marked for investing into its lending arms. These arms are Grow Credit Serve, which gives out unsecured personal loans and Grow Invest Tech, which runs a margin trading business. Now, as I mentioned earlier, margin trading or MTF, lets customers buy stocks by paying only part of the cost up front, while Grow covers the rest as a loan. This arm of Groh's business has scaled rapidly.

To put it in perspective, Groh's MTF loan book, as of June 2025, stood at over $1,000 crore rupees, rising nearly eight times from the June 2024 levels. The interest income from it now makes up about 3% of gross total revenue, which is up from almost nothing a year ago. And the MTF loan book is only set to grow further. This, thanks to the fund infusion it will see, post the IPO. It also hiked the interest rate on MTF loans in June to about 15% per annum. It's a move that could also help the company generate more money per user.

You see, clients opting for MTF tend to spend more than others. And at less than €3,500, gross average revenue per user is among the lowest compared to competitors like Zerodha, Angel 1 and Dhan. The only thing is Grow isn't the only one doubling down on MTF. From Anandrathe to Zerodha, more stock brokers are in on the game now. In fact, the overall domestic broker's MTF loan book crossed the rupees 1-lac-crow mark in September,

which is more than two times higher than just a year ago. So, of course, rising competition could put pressure on interest rates. You see, unlike stock and derivative trades, revenues from MTF carry a much higher risk. Both clients and brokers take a hit if the bets go wrong and clients are unable to pay back. Still, the dominance of broking in gross revenue mix means that MTF and other lending income will take a long time, if at all, to make any meaningful difference. It doesn't really help that all its other businesses, except its broking and MTF arm,

are loss-making or have negligible profit. So, the pressure doesn't seem likely to ease any time soon. But Grow isn't afraid of aiming for a much higher price tag than its rivals when it goes public. Now, if it's valued at around $7 to $9 billion, that means investors would be paying almost 30 to 40 times for the company earned in profits last year. Just to show you how high that number is, let me tell you what other brokers trade at. For example, Angel 1 and Anandrati trade at just 20 to 20. 25 times their profits.

But Grow is aiming even higher. Even if Groh's wealth management vertical is yet to take off in any meaningful way, it's comparing itself not just to brokerages but also to wealth managers like 361, which usually enjoy premium valuations. And that's not all. It also lists Robin Hood, an international discount brokerage and Prudent as a pure. Now Prudent is a mutual fund distributor that distributes regular plans and earns commission income. Grow, on the other hand, doesn't earn a fee when it distributes its own plans.

So here's what it all looks like. Even if its bottom line tells a sobering story, Grow is counting on its size and narrative to make its grand entrance in the public market. Daybreak is produced from the newsroom of the Ken India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription offers daily long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the ken.com and click on the red subscribe button on the top of the Ken website. Today's episode was hosted and produced by my colleague Rachel Vargis and edited by Rajiv Sien.