The Rise And The Reality Check: Groww’s Post-IPO Story

One of the most-watched startup IPOs finally hit the markets earlier this month when fintech major Groww made a strong listing, going live at INR 114 on the BSE, representing a 14% premium over its issue price of INR 100. On the NSE, the stock opened at INR 112, a 12% gain over the issue price.

What followed was nothing short of spectacular. Groww shares went on a blistering post-listing run, surging over 90% from the IPO price in days. But just as quickly as it rose, the stock cooled off. After a five-session rally that had nearly doubled the stock price, Groww ended the week at INR 157.9.

And hot on the heels of the IPO, the company also declared its first quarterly results since listing. For Q2 FY26, Groww reported a 12% rise in net profit to INR 471.3 Cr, compared to INR 420.2 Cr in the same quarter last year.

However, the topline told a slightly different story. Operating revenue fell 9.5% to INR 1,018.7 Cr from INR 1,125.3 Cr in Q2 FY25. 

The company blamed the decline on the impact of true-to-label norms and tighter equity derivatives regulations introduced last year. And this is the reality check that those who invested in Groww have to contend with.  

Market analysts believe the stock had simply run too hard, too fast. At one point, Groww’s market cap even briefly crossed that of the Bombay Stock Exchange, a move analysts now describe as a moment of “irrationality” being corrected.

While Groww keeps on posting stellar profitability and industry-leading margins, this set of earnings may not justify the rich post-listing valuation. 

For now, the stock is trading at a premium multiple, well above what traditional brokerages command, and that’s exactly where the debate lies.

At the moment, the market is willing to pay for the scalability of the business model and long-run optionality, rather than its earnings profile. How long will this faith last? 

From Trading App To Financial Super App

For years, Groww was seen as a clean alternative to traditional stockbrokers, friendly to beginners. It was the app college students used to make their first SIP. The platform young professionals turned to when they wanted a simpler alternative to demat-heavy incumbents. 

But this image had to be shed before the IPO. Groww claims its users were fast maturing and therefore it too had to change into something much bigger: a full-stack financial ecosystem targeting the entire lifecycle of wealth.

This change can be seen in its product evolution: what started off with mutual funds and stocks has grown to include margin trading (MTF), commodity derivatives, credit products, bonds, ETFs, PMS, AIFs, and advisory services through its acquisition of Fisdom. 

In its Q2 FY26 disclosure, the management made it clear that the vision was not quarterly performance, but building over a decade, India’s largest investing and wealth platform.

The pivot is also strategic. Regulatory overhang on derivatives, including the “true-to-label” norms, has made pure-play retail trading models far riskier. Groww’s answer is diversification  and not just of products but of revenue sources as well. 

While derivatives was once the bedrock, accounting for more than two-thirds of its revenue, that share is slowly declining, replaced by stable streams such as stocks, wealth, credit, and interest-based income.

Importantly, Groww has achieved this transition without losing its core strength: the trust of its users. Almost 80% of its new users come organically, through word-of-mouth and brand recall, rather than via expensive advertising.

A look at Groww’s expenses from FY23 to FY25 shows that while the promotional expenses have grown year on year, the company spent just 12% of its total income on marketing in FY25, as opposed to 21.3% in FY23.

Interestingly, no loud rebranding or repositioning campaign has taken place as yet. On the contrary, Groww is silently building the infrastructure for long-term dominance.

“At INR 158 share price, the market seems willing to pay for the scalability of the business model and long-run optionality, rather than the present earnings profile. Groww benefits from a digital-first, low-cost, high-operating-leverage model backed by strong brand recall and customer acquisition efficiency,” Prashant Tapse, VP research analyst at Mehta Equities, told Inc42.

The MTF & Credit Play: Where The Real Money May Be Made

If there is one part of Groww’s business that carries explosive potential, it is the credit and margin trading segment. In well-functioning liquid markets, securities-backed lending has been among the most profitable financial businesses. Groww is entering this turf at scale for the first time.

This fiscal year alone, in Q2 FY26, its MTF book jumped from INR 1,035 Cr to INR 1,668 Cr. Active MTF users surged to approximately 78,000, while the penetration among existing stock traders remains under 1%, which means a huge runway still lies ahead. The company has also set an ambitious target: to move from 1.7% market share in MTF to double digits in the next three years.

The economic logic behind this is powerful. Every user who moves to MTF improves Groww’s revenue not once but on an ongoing basis for as long as the funded position is in operation. In contrast to flat-fee brokerage, MTF yields interest income that is ongoing, sticky, and of high margin. With every 3-4% rise in MTF penetration, Groww believes it could add approximately INR 2 in revenue per order.

“We believe we are still at the nascent stages of this journey and will continue to grow, led by higher penetration, ultimately leading to a fair market share aligned with that of our Stocks Average Daily Turnover”, the company said in its shareholder’s letter.

Then, of course, there is loan against securities, another product that traditionally belonged to banks. Groww has started scratching the surface here as well. 

Currently, it’s enabled only for mutual funds, while stock-backed loans are in the pipeline. Once fully introduced, this could unlock an entirely new income channel: affluent users borrowing against their portfolios instead of selling their assets.

Even the personal loans business is showing signs of stabilisation. Management has admitted that early credit costs were higher, but provisioning is now normalizing as the book matures.

“While the company has delivered strong profitability and industry-leading margins, the stock now trades at a premium multiple significantly higher than that of traditional brokerages. This premium reflects the market’s expectation of aggressive forward growth, driven by successful scaling of high-potential verticals such as wealth management, MTF, lending, AMC, and broader cross-sell opportunities,” added Tapse.

Betting On India’s New Affluent Class

But perhaps the most revealing detail about its future direction is also one of the most overlooked in Groww’s disclosures: affluent users on the platform are growing 52% YoY, versus 20% for total users, and already contribute 34% of total customer assets.

Retail users can trade occasionally or invest small amounts via SIPs. However, affluent users seek portfolio structuring, tax efficiency, PMS, AIFs, structured products, pre-IPO shares, global exposure, and wealth advisory. These are high-ticket, high-margin services, the kind private banks and boutique wealth managers offer.

This is where the Fisdom acquisition becomes far more strategic than it first appeared. Fisdom adds just 3-4% to revenue today. However, it gives Groww ready-made entry into PMS and AIF distribution, insurance advisory, unlisted securities and high-net-worth clientele.

But more important than products is change in perception. Groww is no longer only for the first-time investor. It is preparing to be a platform where customers stay as their net worth grows. from their first INR 500 SIP to their first INR 5 Cr portfolio.

The listed fintech major is okay with some segments being “less monetisable” today. The management has clearly emphasised that the company will not necessarily make products around immediate revenue extraction, but will instead index for long-term engagement and trust.

In other words, Groww isn’t after short-term commissions. It is building a wealth relationship that could last 30 years per user. This is a bet that should make investors a tad bit nervous, but Groww has the execution and operational history to prove itself.

Is The Market Valuing The Present Or The Future?

The above question is where the Groww debate truly sits today.

On current earnings alone, the stock does look expensive when pitted against traditional brokerages. Operating revenue has fallen year-on-year, the derivatives business has taken a hit from tighter regulations, and competition in the broking space is more intense than ever, with players like Zerodha, Upstox, Angel One fighting aggressively for market share. Yet, despite these headwinds, the market continues to price Groww at a premium.

What roles is perception playing here? Groww is no longer being evaluated as a simple broker, but increasingly as a platform – with its ability to scale across several revenue streams.

Investors are buying into a future where operating leverage resembles that of a SaaS business, where broking is just one piece of the much larger engine which also runs on credit, wealth management, and commodities.

“But with that potential comes risk. If user engagement plateaus, if regulations tighten further, if credit defaults rise or if the company struggles to effectively monetise its growing mutual fund and wealth base, the premium multiple could quickly come under pressure. The valuation, after all, is built not on what Groww is today, but on what it promises to become,” an executive at a rival broking platform said.

But if Groww continues to execute the way it has in the last nine years, with discipline, patience, and an obsessive focus on the customer, today’s fluctuations may one day appear as nothing more than early noise in a far longer compounding journey. It is now a story the entire Indian consumer-fintech ecosystem is now quietly and very closely following.

Markets Watch: New Issues, Post-IPO Journey & More

• Meesho Targets $6 Bn Valuation: The Bengaluru-based ecommerce company is preparing for its IPO, with a potential listing planned for early to mid-December
• Capillary’s Mixed Listing Day:  SaaS major Capillary Technologies debuted slightly below its issue price, listing at a 2.9% discount on the BSE and nearly 1% lower on the NSE, indicating a subdued market response
• PhysicsWallah Makes Strong Debut: The edtech major had an impressive listing on the stock exchanges, debuting at a premium of around 31–33% over its issue price on both NSE and BSE
• Snapdeal Parent AceVector Receives SEBI Approval For IPO: : Snapdeal’s parent company, AceVector Group, has secured SEBI’s final approval to move ahead with its upcoming initial public offering

[Edited by Nikhil Subramaniam]