Groww IPO: Riding India’s Digital Investment Wave

In FY24, over 32 million new demat accounts were added in India—a clear signal of how rapidly digital investing is becoming mainstream. At the heart of this shift is Groww, a Bengaluru-based FinTech company that has evolved from a mutual fund distributor into a comprehensive investment platform, offering stocks, Exchange Traded Funds (ETFs), derivatives, and mutual funds.

With more than seven crore registered users, Groww’s simple, mobile-first model has made investing accessible to first-time investors across smaller towns. Now, as Billionbrains Garage Ventures Ltd., Groww’s parent company, heads towards its ₹6,632 crore IPO, it aims to raise fresh capital to strengthen its technology infrastructure, expand lending and margin trading operations, and deepen user engagement.

But does this Groww IPO hold potential? Let’s understand this through an industry overview, Groww’s market position, the challenges ahead, and management strategies.

Industry Overview: India’s Investment & Wealth Management Boom

India’s investment and wealth management industry has evolved rapidly over the past decade. What previously was a savings-led market is now driven by digital participation and rising financial literacy.

As of FY 2024, India had 12.97 crore demat accounts, which is a 58% year-on-year increase. The mutual fund industry also recorded growth at a CAGR of around 18% in the last five years to reach ₹58.91 lakh crore.

Equity markets have become dominant contributors to this growth. Retail investors now account for nearly 38% of the National Stock Exchange’s (NSE) cash market turnover, up from 33% in FY 2020, while the derivatives segment recorded a 56% jump in average daily turnover, primarily driven by options trading. The NSE alone saw 6.2 crore active clients as of June 2025.

Wealth creation has also accelerated through rising disposable income and broader financial inclusion. The household financial savings rate stood at approximately 10.9% of GDP in FY 2024, with a rising share allocated to equities and mutual funds, rather than traditional instruments such as fixed deposits or gold. Meanwhile, India’s High-Net-Worth Individual (HNWI) population grew 12% year-on-year in 2024, with assets worth over $2.8 trillion, showing a growing need for structured wealth management solutions.

The key factors driving this growth are:

• Financial Awareness: The rise of the do-it-yourself (DIY) investing culture, aided by user-friendly mobile applications and regional language interfaces, has driven retail engagement. Over 60% of new investors on online platforms now come from cities outside the top 10 metropolitan areas.

• Digital Infrastructure: The integration of Unified Payments Interface (UPI), Aadhaar-based Know Your Customer (KYC), and e-Mandates has reduced barriers to entry. Between FY20 and FY25, the number of online investment transactions increased by more than 3.5x, with UPI accounting for the majority of systematic investment plan (SIP) and stock purchases.

• Favourable Macroeconomics: A stable Gross Domestic Product (GDP) growth rate of around 7%, a young demographic base (median age of 28 years), and rising disposable incomes continue to sustain India’s investment growth trajectory.

• Global Capital Flows: India remains a preferred investment destination for foreign investors. In FY25, even when the overall market was falling, the country attracted over $20 billion in FPI inflows.

• Investor Protection: The Securities and Exchange Board of India (SEBI) has taken several steps to enhance market transparency. Measures such as true-to-label mutual fund classification, rationalisation of derivatives expiries, and restrictions on pooled accounts have strengthened investor confidence and market stability.

Groww’s Position in the Ecosystem

Groww has established a dominant foothold in India’s investment and wealth management industry. The company is using its technology-driven approach and organic user acquisition strategy to maintain its market share. What’s interesting is that Groww’s growth remains entirely organic.

Here are the insights highlighting Groww’s dominance:

• As of 30 June 2025, Groww’s consolidated user base stood at 6.98 crore, with 3.61 crore active customers. This shows an active-to-total user ratio of over 51%, among the highest in the retail investing space.
  
• The platform’s deep user engagement is underscored by a DAU/MAU ratio of 31.48% in Q1 FY26, indicating consistent daily interaction among its users.
  
• Within the broking segment, the company recorded 2.32 crore active clients on the NSE as of June 2025, translating to a market share of 24.45%, up from 21.53% in FY24.
  
• The firm processed an average daily order volume exceeding 3.5 crore across equities, derivatives, and mutual funds.
  
• In the mutual fund business, SIP registrations increased by 68.33% year-on-year in FY25, with monthly inflows surpassing ₹4,500 crore, reinforcing its retail-focused growth engine.
  
• The company’s mobile-first approach continues to drive e ngagement, with over 90% of transactions executed through its app interface. Meanwhile, its ARPU (Average Revenue per User) from broking and wealth products grew by 13.7% year-over-year in FY25.
  

Key Industry Hurdles Ahead for Groww

Groww, while focusing on expansion, faces several challenges detailed below:

Seasonal Business Fluctuations

Broking activity in India shows strong seasonality. In FY2024, NSE turnover in equities and derivatives rose by 41.09% and 21.94% respectively, in Q2 compared to Q1, and by 36.58% and 32.47% in Q4 compared to Q3. These figures illustrate how performance is heavily dependent on trading cycles and active market phases.

Market Volatility Exposure

Global developments such as the US trade tariffs (2025), China’s stimulus (Sept 2024), and the ongoing Russia–Ukraine conflict have amplified volatility. During periods of uncertainty, investors tend to move towards cash or safer assets, such as gold, which reduces transaction flow.

Competitive Intensity

Large brokerages and banks are aggressively digitising, offering integrated savings-to-wealth platforms with competitive pricing. Simultaneously, niche fintech entrants have expanded quickly, intensifying customer acquisition costs and reducing pricing flexibility.

Customer Default Risk

Unsecured lending through subsidiaries like Groww Creditserv Technology (NBFC) exposes the business to asset quality deterioration, especially amid inflationary or high-interest-rate cycles that impair repayment capacity.

Regulatory Headwinds

Recent SEBI measures—including restrictions on weekly derivatives expiries, larger lot sizes, and the introduction of running account settlements—have led to lower trading volumes and higher compliance costs. Client-level fund segregation and restrictions on pooled accounts have added operational complexity.

Groww’s Growth Strategies

Despite the growth in investors, market penetration in India remains relatively low. Only 16–18% of India’s adult population currently holds a demat account, compared to nearly 62% in the United States. Similarly, active broking penetration in India stands at around 5%. These figures leave vast headroom for Groww to scale further.

Here are some steps the company has taken or plans to execute to maintain its dominance in the market:

• Groww has expanded beyond mutual funds to include equities, futures and options, ETFs, IPOs, and sovereign gold bonds, building a comprehensive investment ecosystem that serves over 10 million active users on its platform.

• The firm will allocate ₹225 crore to performance-based marketing and brand campaigns to expand its reach among younger demographics and enhance top-of-mind recall in the retail investment segment.

• Groww is investing ₹152.5 crore to upgrade its cloud infrastructure to offer faster order execution, reduced downtime, and better scalability to manage high-volume trading activity.

• Through Groww Creditserv Technology Pvt. Ltd. (GCS), the company has ventured into the margin trading facility (MTF) and personal loan segments. This enables them to provide capital-backed credit support, thereby boosting trading volumes.

• With over 80% of users transacting through mobile, Groww’s app-centric model focuses on simple interface design, real-time analytics, and multilingual access to target first-time investors from Tier 2 and Tier 3 cities.

• Groww is strengthening its security framework to manage third-party integration risks and comply with SEBI’s tightening norms on fund segregation and client-level settlement.

Takeaway for Investors

Groww’s IPO presents a mixed case for retail investors. The company reported a 9.46% year-over-year decline in total income to ₹9,484.71 million in Q1 FY26, primarily due to softer trading volumes. However, profit before tax grew 9.7%, indicating tighter cost controls and improved operational efficiency.

Over FY25, Groww generated ₹40,616.45 million in total income and ₹18,243.73 million in profit, translating to a 44.9% profit margin, which reflects the strong scalability of its digital-first model. The IPO includes a ₹1,060 crore fresh issue and a large ₹5,572.3 crore offer for sale, meaning most proceeds won’t directly benefit business expansion. Around ₹750 crore from the fresh issue is earmarked for cloud upgrades, marketing, and Non-Banking Financial Company (NBFC) capital support, while up to 35% may go toward acquisitions and corporate purposes.

Considering the intensifying competition, regulatory pressures, and declining income growth, investors may weigh short-term listing sentiment against long-term earnings visibility before making a decision.