Tiger Global-backed Upstox has sought permits to offer non-bank lending, asset management, and other financial services, as the regulator’s prolonged clampdown on retail frenzy in futures and options has clouded the broking industry’s growth outlook.
While growth almost flattened in the previous fiscal ended March 2025 (FY25), Upstox expects profits to double in the ongoing (FY26) and the next (FY27) financial years, co-founder and CEO Ravi Kumar said in an interview.
The sharp improvement in the profitability of India’s fourth-largest broker by clients in FY26 is driven by a tighter focus on high-value, active traders, which lifted the average revenue per active user (Arpu) and improved retention. “Our Arpu has gone up by over 40%, and we probably have one of the industry-leading retention rates among high-value traders of almost 90%.”
India’s online brokers grappled with the Securities and Exchange Board of India’s (Sebi’) and the finance ministry’s clampdown against speculative trading in equities and derivatives. Since 2024, Sebi has tightened risk norms across derivatives trading, raising margins, curbing weekly options expiries, limiting retail access to high-risk products, and reworking broker incentives to reduce excessive churn. The pressure increased further after finance minister Nirmala Sitharaman increased the securities transaction tax (STT) on derivatives trades in the Union Budget for 2026–27.
The fiscal ended March 2025 was a “fairly difficult” year for the broking industry as regulatory changes added repeated “speed bumps” to growth, Kumar said. The company’s growth stagnated in FY25, with revenue growing around 9% year-on-year to about ₹1,208 crore, sharply slower than the Covid surge.
Upstox, like other online brokers, has been losing trading volumes.
Kumar said Sebi “generally does the right thing by putting these speed bumps… It helps long-term, structurally speaking.” And Upstox is now operating on the assumption that regulatory scrutiny on derivatives and active trading will intensify rather than reverse.
In FY26, the focus on high-Arpu users has driven up its operating income and net profit. “Our Ebitda has grown by almost 120% versus last year. Our PAT is tracking about 2.25x to 2.3x of last year, and our PAT margins have really expanded,” said Kumar. In FY25, profit stood at roughly ₹215 crore.
‘Regulators will be stricter’
Like many fintech firms over the past two years, Upstox aims to become a larger full-stack financial institution. Apart from core broking, it is exploring revenue streams within insurance, asset management and lending.
Insurance is at an early stage with no meaningful revenue contribution, but the company is investing aggressively in leadership, distribution and product to scale the business over the next 12–18 months, according to Kumar.
Upstox has also applied for an asset management company (AMC) and non-bank financial services company (NBFC) licence. Lending is a long-term option rather than an urgent growth lever, Kumar said. “It’s not something we’re in a super rush to complete… but we think it makes sense to have.”
The company is also banking on Sebi’s decision to allow algo trading for retail investors from April this year. “It’s a very important inflection point,” he said.
Upstox is investing in backend infrastructure for high-uptime, low-latency programmatic trading. “We’ve spun up new teams… some of our most elite people are building towards this.”
Meanwhile, certain other experiments have begun to bear fruit, according to him. “Our average daily turnover in commodities has gone up over 2x, and revenue has grown by almost 100%,” he said.
Similarly, its margin trade facility has seen over a twofold increase in turnover year-on-year. Upstox’s systematic investment plan (SIP) platform volume has grown over 35% in the past year, he said.
Hedging bets
Upstox is not alone. In its recent earnings call, rival Groww also indicated that regulatory changes in derivatives and weaker market conditions have begun to weigh on business.
In the past 12 to 18 months, the market hasn’t been that great and the new investor acquisition at the industry level has actually slowed down, said India’s largest broker by client base.
Market cycles, changes in retail investor behaviour, and the possibility of prolonged regulatory scrutiny extending to other broking areas are its risk factors, Kotak Securities said in its January analyst report on Groww.
The broker has said that diversification is becoming central to its strategy, noting that “all the new businesses are growing faster than the existing business.”
Brokerage Dhan is also looking to diversify into segments like insurance as regulatory changes hit trading volumes, Mint reported in October.
No plan to raise funds
Founded in 2009 as a proprietary trading firm by Kumar, Raghu Kumar, and Shrinivas Viswanath, Upstox pivoted to retail broking in 2012. It offers tools built specifically for serious, high-frequency and options traders.
“Our starting point has always been the trader, because that’s where we come from,” Kumar said.
The company, which has raised about $220 million from investors such as Tiger Global Management and Kalaari Capital, was valued at $3.5 billion in 2021.
In 2024, the broking firm repurchased 5% from Ratan Tata, an early angel investor, yielding a 10x return on his original investment as realised capital.
While the company plans to bolster the new streams of revenue, Kumar said there’s “no need for us to raise any kind of primary funding right now”.
A public listing remains on cards, but Upstox hasn’t disclosed the listing timeline. Kumar said remaining private gives Upstox the flexibility to experiment with new business lines without short-term market pressure.
The company’s competitors have been actively raising external funding for growth. Groww raised close to $1 billion in total funding across its pre-initial public offering (IPO) and public listing that concluded last year.
In October, stock trading platform Dhan raised $120 million in a round led by Hornbill Capital, MUFG Bank.