Bengaluru-based stock broking platform Groww has achieved a significant milestone, turning profitable in the financial year ending on March 31, 2023. The parent company, Billionbrains Garage Private Limited, which is the primary competitor to Zerodha, reported a net profit of INR 448.7 Cr in FY23, a remarkable turnaround from a net loss of INR 239 Cr in the previous fiscal year.
Founded in 2017 by the ‘Flipkart Mafia,’ consisting of Harsh Jain, Lalit Keshre, Neeraj Singh, and Ishan Bansal, Groww is a wealthtech startup that empowers users to invest in stocks, exchange-traded funds (ETFs), and IPOs.
In 2021, Groww entered the esteemed unicorn club after securing $83 million in its Series D funding round led by Tiger Global. To date, the startup has raised a total of $393 Mn in funding and has garnered support from notable investors such as Tiger Global, Peak XV Partners, Ribbit Capital, and others.
In FY23, Groww’s operating revenue surged, more than tripling to INR 1,277.8 Cr from INR 351 Cr in the previous fiscal year. A substantial portion of its revenue, 95.9%, came from subscriptions and commissions fees in FY23, totaling INR 1,226.1 Cr during the year under review.
Additionally, the company earned INR 4.8 Cr from tech platform and support charges, marking an 80% decline from INR 23.6 Cr in FY22.
In terms of expenses, Groww witnessed a moderate 41% increase, with expenses reaching INR 932.9 Cr in FY23 compared to INR 663.6 Cr in the previous fiscal year. Notably, employee benefit costs constituted the most substantial expense, increasing by 25% to INR 287 Cr in FY23. Employee salaries and wages more than doubled, reaching INR 251 Cr from INR 109.5 Cr in the prior fiscal year. According to LinkedIn data, Groww’s headcount has grown by 15% year-on-year, currently totaling 1,467 employees.
Groww managed to reduce its advertising costs to INR 243.8 Cr in FY23 from INR 254.5 Cr in the previous fiscal year. In the past, the startup had invested in cricket teams and tournaments to enhance its market share. While it sponsored IPL teams in the past, it most recently sponsored the Asia Cup.
Transaction and other related charges for Groww surged by 187% to INR 219 Cr in FY23 from INR 76 Cr in the previous financial year, contributing to an improved EBITDA margin of 35.6% in FY23, a notable turnaround from -54.6% in FY22.
The remarkable progress in Groww’s financial performance can be attributed to its rapidly growing user base. In the latest update, the Peak XV Partners-backed startup surpassed the bootstrapped unicorn Zerodha in terms of the number of active users. According to data from the National Stock Exchange (NSE), Groww had 6.63 Mn active investors at the end of September 2023, compared to Zerodha’s 6.48 Mn.
The active traders in India totaled 32.56 Mn at the end of September 2023, with Groww commanding a market share of 20.35%, closely followed by Zerodha at 19.9%.
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Meanwhile, Zerodha’s revenue soared to INR 6,875 Cr in FY23, nearly five times that of Groww’s revenue. Zerodha’s profit also experienced a substantial increase, rising by 39% to INR 2,907 Cr during the year under review, up from INR 2,094.3 Cr in FY22.
