Groww IPO: Most users, less income than Zerodha—Can scale justify its valuation?

After Urban Company’s successful debut, the focus has now shifted to Groww, the country’s largest retail brokerage platform, which has received approval to list. The timing couldn’t be trickier.

With regulators tightening rules around derivatives trading and new investor sign-ups slowing, Groww’s IPO comes at a sensitive moment. The question is whether it can ride India’s growing interest in financial markets, or feel the strain of a weakening broking cycle.

When scale doesn't translate into earnings

Groww’s active user base more than doubled from 5.37 million in 2022-23 to 12.9 million in 2024-25, placing it well ahead of Zerodha (7.88 million) and Angel One (7.58 million). However, the base eased to 12.58 million (30 June 2025), reflecting subdued market activity and an industry-wide slowdown.

Zerodha and Angel One too saw declines, with active users at 7.58 million and 7.32 million, respectively. Even so, Groww retained a strong lead with a 26.3% share of National Stock Exchange (NSE) active clients. Yet this scale has not translated into superior monetization as the company continues to lag peers on revenue generation.

Doubling active users helped Groww's revenue more than triple from ₹1,261 crore in 2022-23 to ₹4,062 crore in 2024-25. However, this still lags behind peers such as Zerodha ( ₹8,320 crore in FY24) and Angel One ( ₹5,238 crore), despite their smaller user bases. This difference stems from Groww's much lower monetization per user. Zerodha has not disclosed 2024-25 numbers yet.

Why does Groww earn less per client?

Groww's average revenue per user (Arpu) was just ₹3,339 in 2024-25—among the lowest in the industry. In contrast, Zerodha, Dhan, and Fyers boast an Arpu of over ₹12,000, while Angel One's Arpu stands at around ₹6,000. The difference comes from the profile of Groww's users.

As of 30 June 2025, nearly 81% of Groww’s active users were based outside the national capital region (NCR) and the top five cities. Its customer base is also younger, with a median age of 31 years, and tends to make small trades compared to the higher-volume activity of more seasoned investors.

Notably, 43.2% of new transacting users (NTUs) who joined in 2023-24 and 2024-25 opened their first demat account with Groww. This profile highlights Groww’s strength in attracting first-time investors, but also explains why its revenue productivity lags peers.

Heavy reliance on broking revenues

The reliance on broking remains a key vulnerability. In 2024-25, broking contributed 84.5% ( ₹3,297 crore) of Groww revenue from operations ( ₹3,902 crore), and even in Q1FY26, the share was 79.5%. This concentration is significantly higher than Angel One (63%), while diversified firms such as Motilal Oswal derive less than 15% from broking.

The remaining amount came from non-core activities. Such dependence means any dip in trading activity directly impacts Groww's top line. The pressure was evident in 2024-25. A persistent market slowdown, coupled with regulatory measures to curb excess in derivatives trading, weighed on market sentiment and activity.

As a result, NTUs dropped steeply to just 760,000 in Q1FY26 from 1.67 million in Q1FY25. In contrast, peer companies have a more diversified revenue stream through asset management, distribution and loan businesses.

Diversification attempts: Too small to matter yet

It's not that Groww hasn't tried diversifying, but so far, the efforts haven't moved the needle. In May 2023, Groww entered the asset management business (AMC) by acquiring Indiabulls Asset Management for ₹175 crore. Its assets under management (AUM) have since risen from ₹707 crore (March 2024) to ₹2,520 crore (June 2025).

But since AMC is a scale-driven business, the financial contribution remains negligible, with revenues at just ₹2.7 crore in 2024-25, compared to ₹1.9 crore in 2023-24. In May 2025, Groww also entred Wealth Management by acquiring Fisdom for ₹961 crore, adding distribution of insurance and alternative investment fund (AIF) schemes.

These acquisitions were part of the strategy to diversify and lift Arpu. Yet, Fisdom's revenue in 2023-24 was just ₹84 crore, and it remained loss-making. Alongside, Groww launched newer offerings like Bonds IPO (in May 2025) and API (automated) trading in June 2025.

Collectively, these services, including the margin trading facility (MTF), consumer loans, and AMC, contributed 15.5% to revenue in 2024-25, up from 9.7% in 2022-23. While the share is rising, it is still small compared to the dominance of broking. For Groww to narrow the gap with peers, these newer businesses must scale rapidly to lift overall monetization levels.

Profitability on the upswing

Groww's profitability has scaled up sharply. Net profit rose from ₹458 crore in 2022-23 to ₹1,824 crore in 2024-25, with the 2023-24 loss of ₹805 crore explained by a one-time tax expense of ₹1,340 crore on an outbound merger. Operating performance also strengthened, with Ebitda climbing fourfold to ₹2,306 crore from ₹416 crore in 2022-23. This drove margins higher, from 36.5% to 59%, underscoring improved efficiency at scale. Ebitda is short for earnings before interest, taxes, depreciation, and amortization.

What gives Groww an edge?

According to Google Trends, Groww had the highest search interest in India among the top 10 brokers (by NSE active clients) in 2024-25. It is also the only investment app in India to have crossed 100 million cumulative downloads as of June 2025, according to a RedSeer report.

Among the top five brokers, Groww captured 38.18% of all new app downloads between 2021-22 and June 2025. Much of this growth has come organically, through word-of-mouth and referrals, which has kept marketing expenses low. In Q1FY26, 83.16% of new customers were acquired organically, which helped reduce marketing costs from 19.3% of revenues (2022-23) to 12% in 2024-25 and 11.4% in Q1FY26.

On top of that, Groww boasts a high retention rate of 77.7% among active users and 88.55% among those who use two or more products. This combination of brand pull, low acquisition costs, and high retention underlines why Groww has been able to scale so quickly.

How big is the growth runway?

Having built such scale, Groww is positioned to benefit from the broader expansion of India’s financial sector. The total addressable market for investment and wealth management is projected to double from ₹1.1 trillion in March 2025 to about ₹2.6 trillion by March 2030.

Penetration levels also remain low. Only 16-18% of India’s adult population holds a demat account, and active broking penetration is just 5%, compared with 62% in the US. This leaves ample room for growth. Groww expects the industry’s total user base to rise from 60-70 million today to 120-130 million by 2029-30.

What could go wrong?

At the same time, the risks cannot be ignored. Groww operates in a highly competitive market with low entry barriers. The rise of artificial intelligence and advanced trading platforms could intensify competition. Customer stickiness may also come under pressure if rivals undercut Groww on brokerage fees or offer more aggressive incentives.

In addition, the growing popularity of direct mutual funds and passive products could weigh on asset management and distribution revenues.

The big question

According to market speculation, Groww plans to raise up to $1 billion (about ₹8,800 crore) at an expected valuation of nearly ₹80,000 crore. With 2024-25 profits at ₹1,824 crore, this implies a price-to-earnings multiple of about 44X.

That looks steep compared to its peers. Angel One, Groww’s closest listed rival, trades at 21X earnings, while Motilal Oswal trades around 20X. Both also enjoy far more diversified revenue streams, unlike Groww, which still leans heavily on broking.

This leaves investors with a difficult question. Is Groww’s premium valuation justified by its scale, brand, and growth runway? Or does its dependence on low-yielding customers and a cyclical broking business make the bet riskier than it looks?

For more such analysis, read Profit Pulse.

Madhvendra has over seven years of experience in equity markets and writes detailed research articles on listed Indian companies, sectoral trends, and macroeconomic developments.

The writer does not hold the stocks discussed in this article.

The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.