Zerodha might be India’s most profitable internet company, but it is no longer India’s largest stock broker.
Groww has gone past Zerodha to become India’s largest broker by number of active clients. As of September 2023, Groww has 66.3 lakh active investors while Zerodha has 64.8 lakh. This is the first time Zerodha has been dethroned from the top spot since January 2019, when it had gone past players like ICICI Direct and HDFC to become India’s largest broker.
But Groww, which was founded only in 2016, has seen its userbase explode in recent years. The pandemic in 2020 had caused people to be confined to their homes, and had simultaneously led to a bull run in the stock markets. This had led to millions of Indians entering the stock markets for the first time, and all stock broking companies saw multifold rises in their userbases. In March 2021, Zerodha had 34 lakh customers, while Grow only like 7.8 lakh. But while Zerodha has managed to only double its userbase in the last 2.5 years, Groww has grown nearly 8 times, and has now pipped Zerodha to the top spot.
But there may be more to Groww’s growth than meets the eye. While Zerodha had revenue of Rs. 7000 crore in FY23, Groww’s revenue was just Rs. 1,294 crore. In terms of profits, Zerodha was even further ahead — Zerodha reported a profit of Rs. 2,907 crore in FY23, but Groww’s profit was just Rs. 78 crore.
The divergence in these numbers, even when both companies now have nearly the same number of users, is an indication of the kind of users both companies have been able to garner. Zerodha has many serious stock traders as a part of its userbase, who trade large sums of money frequently, and give Zerodha plenty of revenue through brokerage. Groww, though, has focuses on long-tail users, who have small portfolio sizes, often only apply to IPOs, and don’t trade as frequently. As such, even though Groww is now larger than Zerodha in terms of active users, it could continue to lag the company in terms of revenue and profit numbers.
But Groww’s progress is nothing to be sneezed at. There’s no shortage of Indian fintech firms which have burned large sums of money, but have neither made profits or acquired large numbers of users. Groww has certainly acquired users — it’s become India’s largest broker, and has also managed to make money, having racked up profits of Rs. 79 crore last year. And if it can nudge its users into investing and trading more through its platform, it could emerge as a formidable force in India’s fintech space.