Groww profit doubles on wealth diversification, shares rally
Groww's first-quarter earnings show the Indian brokerage is successfully shifting revenue away from regulatory-threatened equity derivatives, though its premium valuation leaves little room for error.
Billionbrains Garage Ventures Ltd, operating as Groww, saw its shares climb more than 6% over two days after reporting a near-doubling of first-quarter net profit to ₹735 crore. Revenue surged 66% year-on-year to ₹1,500 crore, driven by operating leverage across its business segments. The results underscore the platform's ongoing evolution from a low-cost discount broker into a broader wealth management provider.
The most notable shift is a declining reliance on equity derivatives, a segment facing increased regulatory scrutiny in India. Equity derivatives fell to 52% of total income in the June quarter, down from 56% a year earlier. This was offset by rapid growth in newer lines, with the margin trading facility rising to 8% of revenue from 3%, and commodity derivatives reaching nearly 5% just months after their launch.
This diversification provides a crucial buffer against regulatory crackdowns on retail derivatives and intense industry competition. Sequential revenue was flat as a 4% drop in derivatives income offset gains elsewhere, which management attributed to abated geopolitical volatility. “We believe that these measures somewhat restrained our market share growth in stocks and MTF,” the company said, referencing newly implemented risk controls and tighter trading limits.
Despite these self-imposed curbs, underlying volume growth remained robust. Stock volumes jumped 48% year-on-year and the MTF book grew 3.64 times. Groww also captured almost 29% of the retail market share in notional commodity derivatives volume, surpassing rival Angel One. The platform added 115,000 net active clients in the quarter, bringing its transacting user base to 22 million, even as the broader industry shed 260,000 clients.
Beyond trading, Groww solidified its position as India's largest direct mutual fund distributor with ₹1.9 trillion in assets. Its asset management arm grew assets under management roughly 140% to ₹5,491 crore, with further growth anticipated following expected regulatory approval for a strategic investment by State Street Global Advisors. However, smaller ventures like the wealth management business Fisdom remain in the gestation phase, posting an operating loss of ₹11 crore in the quarter.
After a 65% share price rally over the past year, the stock now trades at roughly 33 times estimated fiscal 2028 earnings, according to Bloomberg. That rich valuation reflects confidence in the firm's pivot to higher-margin wealth products. It also affords the company little margin for execution missteps as it navigates a shifting regulatory landscape and volatile retail trading sentiment.
