Groww, a leading investment platform, has surpassed Zerodha to become the top stockbroker in India by number of active users. According to data from the National Stock Exchange (NSE) in September 2023, Groww had 6.63 million active investors compared to Zerodha's 6.48 million. This represents a remarkable rise for the 5-year old fintech firm against the incumbent brokerage giant.

Just two years ago in March 2021, Zerodha had around 3.4 million customers while Groww had only 0.78 million. Since then, while Zerodha has seen steady growth, Groww's user base has expanded exponentially, increasing by 750% to around 5.78 million investors.

Intensifying Competition in Online Brokerage

Groww's meteoric growth has intensified competition in the online brokerage sector. HDFC Bank launched its discount trading platform Sky, aimed directly at the young investor demographic. Venture capital-backed fintech firms like Groww and Upstox have gained popularity by avoiding account opening or annual maintenance charges.

India had 12.97 crore demat accounts by September 2023 but only 3.34 crore active traders on exchanges annually. With its strong focus on customer acquisition, Groww seems poised to capture a bigger share of this large addressable market.

Revenue Growth Lags User Growth-Zerodha

Despite outpacing Zerodha in user growth, Groww's revenues are still over five times lower. In FY23, Zerodha reported a 39% increase in revenues to ₹6,875 crore. Net profit also rose by 39% to ₹2,907 crore.

In comparison, Groww recorded revenue of ₹1,294 crore in FY23, more than tripling from ₹367 crore in FY22. It posted a net profit of ₹73 crore. Zerodha dominates futures and options trading, a highly lucrative segment that Groww is now trying to expand into.

Overall, Groww's remarkable growth reveals the potential of India's expanding digital investment ecosystem. But the startup will need to expand revenue and profit streams and retain customers to justify its meteoric rise.

Focus on Long-Term Investors

Groww initially concentrated more on offering mutual funds and systematic investment plans targeted at first-time investors. Zerodha has catered to active traders from the beginning in addition to long-term investors. But Groww is increasingly attracting daily traders with competitive pricing and technology.

Lalit Keshre, founder of Groww, said on X. “Firstly and most importantly, we are grateful to all our customers who trusted a young company – our focus will always be to provide you the best experience. Secondly, we are grateful for the digital public infrastructure (DPI) built over the last few years that enabled our growth.”

Recently, Zerodha CEO Nithin Kamath has warned startups against getting carried away by high valuations. He argues that overpromising on growth can lead to issues later when reality sinks in. Continued sustainable growth driven by solid business fundamentals is more important.

"Trading the markets is a serious business with serious risks involved. Collecting an account opening fee right at the start also, in a way, helps set this expectation with a potential customer, filtering out users who may not be serious about trading or investing with us," Nitin Kamath Zerodha CEO wrote in a recent blog post.

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