Groww's founders won't sell a single share in the IPO. Is their long-term conviction justified?

After nearly two years of subdued primary-market activity, India’s startup IPO cycle is turning again. Following the successful debut of Urban Company and the day-one oversubscription of the richly valued Lenskart offering, the spotlight now shifts to Bengaluru-based retail investment platform Groww, which is preparing to list under its parent entity, BillionBrains Garage Ventures Ltd.

The IPO opens on Tuesday and closes on Friday, with a price band of ₹95- ₹100 per share. It comprises a fresh issue of ₹1,060 crore and an offer for sale (OFS) of 557.2 million shares worth ₹5,572 crore.

The company plans to use the IPO proceeds to strengthen its cloud infrastructure ( ₹152.5 crore), for brand and performance marketing ( ₹225 crore), capital infusion into its non-banking financial company Groww Creditserv ( ₹205 crore), funding margin-trading operations at Groww Invest Tech ( ₹167.5 crore), and for inorganic growth and general corporate purposes.

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Put your money where your mouth is

What makes this listing the major talking point is the promoters’ decision to sit out the OFS entirely. Together, Groww’s four co-founders—Lalit Keshre, Harsh Jain, Ishan Bansal, and Neeraj Singh—hold about 26.6% stake. They were earlier expected to offload a million shares each, as indicated in the draft prospectus filed last month.

“The DRHP figure was more of a placeholder—around ₹10 crore each—to meet the 10% minimum OFS requirement," said Ishan Bansal, whole-time director and chief financial officer of BillionBrains Garage Ventures Ltd. “Once all existing investors confirmed participation, we withdrew our portion from the RHP."

In a similar show of confidence, Gaurav Singh Kushwaha, promoter of BlueStone Jewellery & Lifestyle, whose company tapped the capital markets in August, did not sell any of his shares in the OFS.

Groww’s journey mirrors the evolution of India’s retail investor. Started in 2016 by four former Flipkart colleagues, the company began as a mutual fund distribution platform aimed at first-time investors. The mobile app, launched in 2018, made investing as simple as ordering food online.

By 2020, Groww had secured a broking licence and its user base crossed one million transacting customers. Derivatives trading followed in 2021, and by FY23, it had turned profitable. Subsequent milestones—an RBI-approved NBFC arm, acquisition of Indiabulls AMC, and launch of margin trading — cemented its status as the largest broker on the NSE.

As of June 2025, Groww boasted 18 million active transacting users across products spanning stocks, mutual funds, bonds, loans, and wealth products. Its customer mix sets it apart: about 81% of users are from outside India’s top five cities, and the median user age is around 31 years, reflecting deep penetration among the country's aspiring investors.

Groww is the only Indian investment app to have crossed 100 million cumulative downloads as of June 2025, according to its red herring prospectus. It accounted for 38.2% of new downloads among the top five brokers between FY22 and June 2025. Google Trends data also ranks Groww as the most-searched brokerage brand in India, the document highlighted.

Groww’s system handles transactions at speeds comparable to UPI, showing the strength of its technology platform, it said. It also enjoys strong customer loyalty – 77.7% of active users and 88.6% of those using multiple products continue to trade regularly, reflecting high user stickiness.

Growth trajectory

Groww’s expansion in active clients has been robust. Its NSE active users surged from 5.37 million in FY23 to 12.92 million in FY25 — a 2.4x jump in just two years. Peers such as Zerodha (7.9 million), Angel One (7.6 million), and Motilal Oswal (1 million) trail by some distance.

That scale translated into a four-fold jump in financials in two years, as revenue rose from ₹1,141.5 crore in FY23 to ₹3,901 crore in FY25. Ebitda (earnings before interest, taxes, depreciation, and amortisation) leapt to ₹2,306 crore from ₹416 crore, while net profit grew nearly four-times to ₹1,824 crore. Even after a one-off ₹1,340-crore tax adjustment in FY24 linked to a merger, Groww’s growth trajectory remained intact. Without that impact, profit after tax for FY24 would have been about ₹534 crore.

Operating leverage has played out impressively: Ebitda margin expanded from 36.5% in FY23 to nearly 59% in FY25, aided by scale and declining marketing intensity.

“Several factors have driven our growth," said Bansal. “We began as one of the largest mutual fund platforms, which gave us a strong base for broking. Our user-friendly app and high retention have powered strong word-of-mouth adoption, especially beyond metros."

Going forward, analysts feel the company’s profitability will likely normalise as it steps up post-listing investments.

“Groww’s FY25 financials showcase a remarkable leap in profitability, positioning it among India’s most efficient fintech platforms. Yet these margins may not be fully sustainable," said Kush Gupta, director, SKG Investment & Advisory. “Post-listing, higher spends on marketing, tech and compliance could soften margins to 45–50%, still impressive by industry standards."

On sustainability, Charmi Shah, business head at financial service firm, Wealth1, said, “The 59% margin reflects operating efficiency, but sustainability depends on how Groww reinvests to expand its ecosystem. Profitability should remain strong but normalise as the company scales brand visibility and regulatory compliance."

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Platform power

Groww’s technology backbone remains its key differentiator. Software, server and technology expenses rose to 27.6% of its total costs in FY25, up from 17.9% in FY23. This underscores management’s focus on platform reliability and speed — critical for sustaining its high transaction load.

“Groww is raising funds for cloud infrastructure as per its IPO objectives. With a scalable platform model, its software costs will grow slower than the customer asset base, supporting long-term profitability," noted SimranJeet Singh Bhatia, senior analyst, Almondz Group.

Monetisation gap

Beneath the rapid scale, however, lies a persistent challenge—low monetisation per customer. Groww’s average revenue per user (Arpu) stood at ₹3,339 in FY25, among the lowest in the industry. In comparison, peers such as Anand Rathi Share, Motilal Oswal Financial, and Geojit Financial earn over ₹11,000 per user, while Angel One averages around ₹4,600.

“The main reason is our younger user base," explained Bansal. “They have smaller portfolios and trade less. But older cohorts are now approaching industry Arpu levels, and product diversification will lift it further."

Bhatia explains this with Groww’s diversification push that is beginning to reflect in numbers. Over 5.7 million users now use more than one wealth product, boosting cross-selling and stickiness. “Affluent users with over ₹25 lakh in assets now contribute 33% of customer assets, up from 20% in FY23," said Bhatia. “We expect Arpu to improve steadily with focus on HNIs (high-networth individuals) and wealth diversification."

Other challenges

Broking contributed nearly 80% of Groww's revenues in Q1FY26, while diversified players like Motilal Oswal derive less than half from brokerage revenue. For others, like Angel One, the broking business' share is 60%.

To reduce this dependence, Groww has made strategic moves in adjacent segments.

In May 2023 it acquired Indiabulls AMC for ₹175 crore; the AMC’s AUM rose from ₹707 crore (March 2024) to ₹2,520 crore (June 2025). In May 2025, Groww acquired Fisdom, a wealth-tech firm offering insurance and AIF distribution, for ₹961 crore. Fisdom reported ₹84 crore revenue in FY24 but is still loss-making.

Yet, their contribution to the group’s top line remains modest. Collectively, new verticals including margin trading facility, consumer credit and AMC contributed 15.5% of revenue in FY25, up from 9.7% in FY23 and 20.5% in Q1FY26.

Despite this, Groww commands a premium valuation, trading at a price-to -earnings ratio of 31.3 on FY25 earnings at the upper price band, versus Motilal Oswal’s 14.7, Angel One’s 17.8, and Nuvama Wealth’s 22.1. Analysts view this as a sign of investor confidence. “The premium reflects investor confidence in its scalability and leadership in retail investing," Shah said.

Meanwhile, the industry faces signs of slowdown amid regulatory changes and shaky investor confidence. New transacting users rose from 2.4 million in FY23 to 6 million in FY25, but slowed to 0.8 million in Q1FY26, roughly half the prior-year addition.

In Q1FY26, Groww’s revenue declined 10% to ₹904 crore, a smaller drop compared to peers. ICICI Securities’ revenue fell 14% to ₹1,409 crore, Geojit Financial’s declined 15% to ₹153 crore, and Angel One’s slipped 19% to ₹1,140 crore. A Mint analysis of 15 brokerage houses’ whose Q2FY26 results have been declared so far shows this continued broad-based weakness across the sector — 12 out of 15 firms reported topline declines between 2% and 57%. Among larger players, ICICI Securities’ revenue was down 17% year-on-year to ₹1,422 crore, while Angel One’s fell 21% to ₹1,179 crore.

But Bansal strikes an optimistic tone. He noted, “India’s capital market is still young and offers long-term growth potential. Regulatory changes may cause short-term dips but strengthen the ecosystem and improve retention." He added, “While peers saw revenue declines, our impact was limited—our derivatives turnover grew 20% year-on-year, helping us gain market share even in a slowdown." He believes Groww’s diversification across wealth, lending and insurance should offset risks over time

Though analysts caution that Groww’s concentration could pose risks amid SEBI’s tightening of derivative trading norms—larger lot sizes, fewer expiries, and stricter margins.

“F&O activity drives a substantial part of Groww’s trading revenue," said Shah. “A sustained slowdown could temper growth and margins, though diversification into lending and wealth products provides some cushion."

Further, Nuvama Institutional Equities estimates that even a 5% fall in F&O trades would trim Groww’s revenue, Ebitda and profit by 2.5%, 4.8% and 4.4%, respectively—manageable given its cost base.

Untapped wealth

Despite near-term risks, Groww’s long-term opportunity remains immense, rooted in India's underpenetrated market. India’s household equity exposure, at just 6% of total wealth, lags significantly behind figures like 22% in the US and 18% in China . Further underscoring this potential, SEBI’s Investor Survey 2025 reveals that while 63% of households are aware of securities, only 9.5% participate, leaving over 200 million households on the sidelines.

This structural gap means the total addressable market for investment and wealth management is projected to rise from ₹1.1 trillion in 2025 to a massive ₹2.6 trillion by 2030. With only 16–18% of adults holding demat accounts and just 5% being active investors, the headroom for expansion is enormous.

Groww is uniquely positioned to capture this growth. Its deep presence in tier-II and tier-III cities, vernacular engagement, and mobile-first experience directly align with India’s national push for 'Digital India' and financial inclusion. As fintech regulation matures and capital markets deepen, Groww's evolution from a transaction-led broker to a diversified wealth platform will be the key determinant of its next phase of exponential growth.