IPO on Horizon, but Revenue Dips Loom: Groww Charts New Path as Regulations Curb F&O Frenzy

As Groww is all set for the new-age tech IPO, the mood around the public listing of India’s leading investment app is as much about anticipation as it is about caution. The fintech, whose revenue heavily relied on F&O (future and options) trading and retail investors, has now come under scrutiny since the markets regulator Sebi (Securities and Exchange Board of India) rejiged trading rules.

The new norms have been introduced to reduce instances of spurious F&O ban periods in single-stock contracts and provide better oversight over the possibility of concentration or manipulation risk in index options.

Despite these increased regulations, the company is holding strong and pushing into new businesses. Its diversification started with the launch of ‘915’, a standalone web-based platform developed in-house to cater to professional traders and high-volume investors.

The second move was the introduction of ‘W’, a decisive entry into wealth management. It offers Portfolio Management Services (PMS), and Alternative Investment Funds (AIFs) aimed at high-net-worth individuals.

Its move into wealth management signals diversification and a clear ambition to move up the value chain—a shift that gains urgency as Sebi’s restrictions on retail F&O activity hit a key profit engine for the industry. In addition, the app has also started focusing on high-value customers like high-volume traders, and ultra-rich high-net-worth individuals to reduce its dependency on retail investors.

Investors will now closely watch how these diversification bets translate into financial resilience in the long run. Though Groww’s draft papers show impressive topline growth and profitability in FY25, the first quarter of FY26 already reflected the hit from F&O curbs.

Financials behind Groww’s IPO Pitch

The fintech’s financials for FY25 and the first quarter of FY26 paint a picture of strong profit recovery, but also emerging pressure ahead of going public. In FY25, Groww turned the table after reporting a net loss of ₹805 crore in the fiscal year 2024. It posted a net profit of ₹1,819- ₹1,824 crore in FY25. The company’s revenue from operations also rose substantially by approximately 49% - from about ₹2,609 crore in FY24 to around ₹4,056 crore in FY25.

However, the first quarter of FY26 showed mixed symbols as its operating revenue dropped to ₹904.4 crore (year-on-year) decline of 10% but profit climbed to ₹378.4 crore from ₹338 crore in the same quarter last year. This shows that Groww managed to improve its bottom line despite seeing a decline in its top line in Q1 FY26.

Its key margin metrics still look relatively healthy in FY25 because the company managed high contribution and profit margin levels, even as the business shifted away slightly from broking. But it is important to note that broking still accounted for a large majority of revenue (somewhere around 80-85%) in FY25.

And the Q1 FY26 data reflects two things for Groww’s IPO story – one, the app’s resilience in costs and expense control, which allowed profit to rise despite a drop in revenue; two, the shifting regulatory headwinds, is likely to beginning to bite.

It’s not only F&O curbs, but the bloodbath on dalal street in early 2025 also erode a significant number of active user base for Groww and its rival Zerodha. Groww saw its user base fall to 12.07 million in August from 13 million in February 2025. However, the app is still ahead of its rivals.

Zerodha and Angel One also reported a similar trend, reporting a consistent decline of active clients, sliding to 7.26 million from 7.95 and 7.04 million from the peak of 7.64 million during the same time period.

These on-paper figures show resilience, but analysts suggest the real test lies in whether the fintech can gain investors’ confidence and sustain similar growth after making its debut on Indian stock exchanges.

Numbers vs Reality: Groww IPO’s Real Test

While Groww’s financials give reasons to remain optimistic, experts caution that the IPO’s true challenge will be sustaining growth amid regulatory tightening and market volatility. “Since the advent of digital brokers, headlines have focussed on falling brokerage, however the reality is that the market is growing and most brokers remain profitable,” said Bruce Keith, cofounder, InvestorAi.

He believes that execution is a basic hygiene factor, what differentiates the winners is content and in the age of AI, customers expect strategies and research that can give them an edge. It’s not enough to have all the products on the shelf, says Keith, adding that the company needs to help investors find the right ones and provide an experience that encourages them to be its repeat customer.

The sheer volume of inactive accounts indicate that lack of engagement is a real industry issue and the brokers who are providing tech enabled and differentiated product offerings, including new investment services will continue to win market share,” he added.

On the strategic side, Sourav Chaudhary, MD of Raghunath Capital emphasises that Groww’s push beyond pure broking into margin funding, credit, AMC, and wealth management is ambitious but achievable if each vertical can stand on its own profitability.

“Global experience shows the model works when fee income is paired with stable streams such as interest, advisory, or AMC revenue,” he notes, citing examples like Charles Schwab and Interactive Brokers for disciplined scale. At the same time, he warns that rapid expansion without strong risk and compliance controls—as seen with Robinhood and eToro—can quickly unravel.

He suggest the key things to monitor after the IPO - whether non-broking income steadily rises as a share of revenue, if customer stickiness and ARPU improve, whether costs stay under control as new products scale, and how clean the regulatory record remains. If credit, AMC and margin funding start adding reliable profits instead of just revenue, Chaudhary says that it will show the strategy is delivering.

Choudhary further points out that Groww’s aggressive diversification gives spotlight on governance and operational disclipline - from board independence to founder incentives and transparency. According to him, the toughest challenges lie in regulatory changes, credit quality in the lending portfolio, and the risk of operational slip-ups that dent user trust.

Steps Needed to Support IPO Case

As Groww heads toward its much-anticipated IPO which is expected to raise around ₹7,000 crore from the public market at a valuation of $7-8 billion, Raghunath Capital’s MD suggests that the way to offset these challenges is by keeping capital buffers conservative, rolling out new products in phases with limits on exposure, building strong compliance teams, and disclosing unit economics openly

And the pace of expansion has to be matched by equal pace in building controls. On the other hand, Ashish Padiyar, managing partner at Bellwether Associates points out that Groww needs to move fast with monetisation through margin funding, interest income, subscription/advisory tiers, and possible B2B services to gain investors confidence.

“The only brokerage dependency makes the enterprise vulnerable to variations in volumes, whereas newer income streams can stabilise revenues and enhance IPO valuations by demonstrating predictable revenues,” he says. And if Groww fails to adapt quickly, Padiyar warns that regulatory tightening could erode profitability faster than scale benefits can compensate, making diversification not optional but essential.

With most fintech brokers operating on razor-thin margins, long-term viability depends on a strategic pivot. Groww’s transition into lending, subscription-based products, advisory services, and BFSI adjacencies could generate steady, high-margin revenues—the kind of structural strength that investors will scrutinise closely as the company moves toward its public listing.

Ahead of the IPO, Groww raised $200 million in a pre-IPO round from investors such as GIC and ICONIQ, pegging its valuation at $7 billion. It also acquired wealth-tech start-up Fisdom in an all-cash deal worth $150 million, expanding its presence in advisory and wealth management. The message seems clear that Groww wants to walk into Dalal Street as a full-stack fintech, not just as a high-flying brokerage.