Groww Q2 Results: Net Profit Rises 12% to ₹471 Crore, MTF Book Grows to ₹1,668 Crore
Billionbrains Garage Ventures, the parent company of popular investment platform Groww, reported strong profitability growth in the second quarter of fiscal year 2026. The recently listed fintech firm posted a 12% year-on-year increase in consolidated net profit to ₹471 crore for Q2 FY26 compared to ₹420 crore in the corresponding period last year, according to results announced on Friday, November 21.
Revenue Performance: Mixed Trends
Despite robust profit growth, Groww experienced a 9.4% year-on-year decline in revenue from operations, which fell to ₹1,019 crore in the July-September quarter from ₹1,125 crore reported in Q2 FY25.
However, the sequential trend tells a more positive story. Revenue grew 13% quarter-on-quarter, driven by several key factors:
- Increase in active users following successful new customer acquisitions during the quarter
- Higher engagement from existing customers through deeper product penetration
- Improved user maturity leading to increased activity levels
Notably, 4.5% of the 13% incremental revenue growth came from newly acquired users, while the remaining growth was generated by existing users—demonstrating strong retention and engagement strategies.
Strong Profitability Metrics
Groww's operating profit showed impressive expansion during the quarter. The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) surged 10% to ₹604 crore compared to ₹550 crore in the year-ago period.
More significantly, the EBITDA margin expanded substantially to 59.29% from 48.88% in the corresponding quarter last year, indicating improved operational efficiency and better cost management.
Net income declined 7.7% to ₹1,071 crore in the reporting quarter from ₹1,160 crore year-on-year, reflecting changes in the revenue mix and market conditions.
Active User Growth and Engagement
Groww's user metrics demonstrated healthy sequential growth, with active users rising 3.2% quarter-on-quarter. The growth was driven by:
- Successful new user acquisition campaigns
- Higher number of users engaged across multiple products
- Increased user activity levels across the platform
According to the company's investor presentation, growth is driven by two primary factors: active user expansion through new acquisitions and retention, and increased activity from existing customers resulting from product penetration and user maturity.
Emerging Product Touchpoints: ETFs and IPOs
Groww highlighted that exchange-traded funds (ETFs) and initial public offerings (IPOs) are becoming increasingly important customer acquisition channels:
- ETF-first users: Rose sixfold year-on-year to 6% of new sign-ups
- IPO-first users: Doubled to 6% of new acquisitions
- Mutual fund SIP-first sign-ups: Increased to 36%, up seven percentage points
- Stock-first onboarding: Declined to 37%, down 15 percentage points year-on-year
This shift in user acquisition patterns demonstrates Groww's success in diversifying its product offerings and attracting customers through multiple entry points beyond traditional equity trading.
Margin Trading Facility Shows Rapid Growth
One of the quarter's standout highlights was the continued rapid scaling of Groww's margin trading facility (MTF), launched in April 2024. The MTF book has grown to ₹1,668.3 crore and now serves approximately 78,000 active users.
However, this represents only 0.7% penetration of Groww's 10.65 million stock investors, indicating significant room for further expansion. The low penetration rate suggests substantial growth potential as more users discover and adopt the margin trading feature.
Improving Monetization Metrics
Groww reported positive developments in its monetization capabilities during the quarter:
- Revenue per broking order: Increased from ₹18 to ₹19.8 by the end of September quarter
- Average equity order value: Jumped 66% to ₹59,079
- Growth driven by combination of higher order values and pricing revisions
However, the company noted that derivative orders yielded softened due to SEBI's true-to-label circular, which introduced stricter regulations for derivatives trading. This regulatory change impacted revenue generation from the derivatives segment.
Strategic Growth Drivers
Groww's performance reflects several strategic initiatives bearing fruit:
1. Product Diversification
The platform's expansion beyond equity trading into mutual funds, ETFs, IPOs, and margin trading has created multiple revenue streams and customer touchpoints.
2. User Maturity
As users become more comfortable with investing, they tend to increase transaction frequency and portfolio sizes, driving higher revenue per user.
3. Cross-Selling Success
The growing number of users engaged across multiple products demonstrates effective cross-selling strategies and platform stickiness.
Market Reaction: Strong Share Price Performance
Following the earnings announcement, Groww shares responded positively to the results. The stock jumped nearly 8% from the day's low to reach an intraday high of ₹168.39, reflecting investor confidence in the company's growth trajectory and profitability metrics.
The positive market reaction suggests that investors view the company's expanding profit margins, growing MTF business, and improving monetization metrics favorably despite the year-on-year revenue decline.
Competitive Landscape
Groww operates in an increasingly competitive fintech space with several established players and new entrants vying for market share. The company's ability to maintain profitability while growing its user base and launching new products positions it favorably against competitors.
The platform's user-friendly interface, low-cost structure, and comprehensive product offerings have helped it capture significant market share, particularly among younger, first-time investors.
Regulatory Environment
The company acknowledged the impact of SEBI regulations, particularly the true-to-label circular affecting derivatives trading. As India's securities regulator continues to enhance investor protection measures, fintech platforms like Groww must adapt their business models while maintaining growth momentum.
Future Outlook and Growth Opportunities
Several factors position Groww for continued growth:
- Low MTF penetration: With only 0.7% of stock investors using margin trading, significant expansion potential exists
- Growing investor base: India's increasing financial literacy and digital adoption support long-term user growth
- Product innovation: Continued development of new features and offerings can drive engagement
- Margin expansion: Already strong EBITDA margins of 59.29% demonstrate operational excellence
Key Takeaways for Investors
Groww's Q2 FY26 results present a mixed but ultimately positive picture:
- Strong profitability growth and margin expansion demonstrate business quality
- Sequential revenue growth indicates recovery momentum
- New product adoption (ETFs, IPOs, MTF) is diversifying the business
- Low MTF penetration offers significant growth runway
- Improving monetization metrics suggest pricing power
The company's ability to grow profits while investing in new products and user acquisition suggests a sustainable business model capable of navigating competitive and regulatory challenges in India's dynamic fintech landscape.
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