India’s most profitable internet company is in the broking space, and broking is proving to be fertile ground for unicorns to make some money.
Groww has reported a profit of Rs. 298 crore in FY24. This is 4x more than the profit of Rs. 73 crore it had reported in FY23. Groww’s revenue, meanwhile, rose from Rs. 1,295 crore in FY23 to Rs. 2,900 crore in FY24. These numbers are for Groww’s stock broking business, and don’t include its credit business.
These results come as Groww has grown its lead as India’s top broker. The title had been held by Zerodha for years, but Groww had gone past it in number of clients in September last year. Since then, the lead has only increased — Groww now has 1.18 crore customers, while Zerodha has around 78 lakh.
Groww hasn’t only become India’s largest broker within 8 years of being founded, but is one of the handful of Indian unicorn startups that are making serious money. Groww had reported its first ever profit of Rs. 2.7 crore in FY21, but had slipped back into losses in FY22, reported a loss of Rs. 239 crore. It had rebounded strongly in FY23 with a profit of Rs. 448 crore, and with its stock broking profit alone rising 4x to Rs. 278 crore, it’s likely that its overall profit numbers will be even more impressive.
Groww is a part of a growing tribe of stock broking startups that are profitable. India’s most profitable internet company, Zerodha, recently reported a profit of Rs. 4,700 crore. Upstox had claimed to be profitable in FY23 with a profit of Rs. 25 crore, while one of the newest entrants in the space, Dhan, has reported its first profit of Rs. 155 crore this year.
But there might be dark clouds looming on the horizon. Most broking companies make the bulk of their revenue from derivatives trading, and Indian authorities have been taking a dim view of retail participation in the area. A SEBI paper had recently revealed that global trading firms made Rs. 61,000 crore of profits trading derivatives in the Indian markets, while individual investors lost the same amount. With as many as 93 percent of stock market traders making losses, SEBI has stepped in and made changes that’ll made it harder for smaller investors to trade derivatives. These changes could put downward pressure on the balance sheets of these broking companies, but for now, stock broking has emerged as emerged as the pre-eminent sector where Indian tech startups are managing to make some money.