Copyright thehindubusinessline
What does the IPO milestone mean for Groww? We’ve been profitable for three years and felt this was the right time to let customers become shareholders. After domiciling to India and proving our resilience through regulatory cycles, we wanted to offer this opportunity. It’s validation of what we’ve built, but really it’s just the beginning of the next journey. Our contribution margin is 65 per cent and growing. We’ve built resilience into the business. Last time regulation came in, we proved how resilient we are compared to the industry — with just a 10 per cent delta when others were hit harder. Q: Groww recently saw regulatory changes impact Q1 results with a 10 per cent revenue dip. How do you view the regulatory environment? Regulations have actually helped us over the years. As a tech company, we don’t face significant incremental compliance costs and can build products accordingly. Our purpose aligns with the regulator’s goals — expanding the market and keeping customers safe for the long term. The F&O regulations, while causing a one-time revenue dip, made our business more resilient. Dependency on single revenue stream has decreased, and industry participation has become healthier. SEBI is open to dialogue, takes our inputs as we sit with more customers than anyone else, and gives adequate time for tech changes. It’s a luxury to operate in a regulated industry with a proactive regulator. What’s your view on retail participation and the future of India’s investing ecosystem? We’re still far from where we can be. A SEBI survey showed 65 per cent of households want to participate in capital markets, but only 9.5 per cent actually do. Compare this to developed countries where participation exceeds 65 per cent. As India’s GDP grows, market participation will reflect that growth. People who traditionally invested in real estate, gold, or fixed deposits now have access to capital markets. The last few years showed strong retail investor sophistication — we see 77-78 per cent retention rates after three years on investment platforms. This is just the beginning. You command 26 per cent market share and capture 45 per cent of incremental monthly users. Where does growth come from now? We have three clear growth levers. First, we’re still acquiring customers at a strong pace. Second, our customer journey is relatively short — there’s significant monetisation potential from existing users as they explore more products. Third, we’re launching new revenue streams. Mutual funds, launched nine months ago, represent just 1 per cent of industry share when our fair market share is much larger. We recently launched commodities and are rolling out wealth products — PMS, AIF, bonds, and advisory services — that 2.5-3 lakh of our customers currently lack access to. How do you see revenue diversification playing out, given stockbroking remains your mainstay? Customers view us as a wealth creation platform, not just a stockbroking app. Broking was 95 per cent of revenue earlier, dropped to 85 per cent, and now stands at 80 per cent. As new products scale — some with delayed monetisation cycles — they’ll contribute double digits to our revenue mix. We take time to build exceptional experiences. We started working on commodities last year, applied for licences, and are launching now. We only enter when we see genuine demand, can build a superior experience, and the regulatory environment supports it. What’s the long-term goal? Our focus is to build a trusted platform for wealth creation in India. Profitability gives us the base to grow sustainably — and the IPO is a step forward in that direction.”
