Stockbroking platform Groww is reportedly in discussions to secure $200 million in funding ahead of its initial public offering (IPO). The company, which is expected to go public by the end of this year or early next year, is in advanced talks with Singapore’s sovereign wealth fund GIC and its existing investor Tiger Global for the fundraising round. The potential deal could value the Bengaluru-based startup at approximately $6.5 billion.
Investor Backing and Valuation Surge
According to reports, Groww has raised close to $400 million from prominent investors such as Peak XV, Tiger Global, Ribbit Capital, and YC Continuity. The company’s last funding round was its Series E in October 2021, where it raised $251 million and was valued at around $3 billion. Since then, it has not raised any fresh capital.
Market analysts suggest that Groww is targeting a valuation between $6 billion and $8 billion for its upcoming IPO. Earlier reports indicated that the fintech startup aims to raise around $1 billion through its public listing.
India’s Leading Stockbroking Platform
Founded in 2017 by Lalit Keshre, Neeraj Singh, and Ishan Bansal, Groww has positioned itself as a leading online discount broking platform, enabling users to invest in stocks, exchange-traded funds (ETFs), and IPOs. The company boasts a strong user base, with over 13 million monthly active users as of February 2024, making it the largest stockbroking firm in India by user count.
In preparation for its IPO, Groww has been making strategic moves, including appointing top financial institutions such as JPMorgan Chase & Co. and Kotak Mahindra Bank to manage the public issue. Additionally, the company has relocated its domicile back to India, a step seen as crucial for its market debut.
Financial Performance in FY24: Profitability vs. One-Time Losses
Groww’s revenue from operations surged to INR 3,145 crore in the financial year 2024 (FY24). However, the company recorded a net loss of INR 805 crore during this period, a significant shift from the net profit of INR 448.7 crore reported in the previous fiscal year. The loss was primarily attributed to a one-time tax payment of INR 1,340 crore, which was incurred due to the company’s domicile shift from the U.S. back to India.
Despite the reported losses, Groww remained operationally profitable, recording an operational profit of INR 535 crore for FY24. This indicates strong underlying business fundamentals and revenue-generating potential despite temporary financial setbacks.
Market Fluctuations Impact Active User Base
The overall market correction in January 2024 led to a slight decline in Groww’s active user base. The company’s active users dropped from 13.2 million in December to 13 million in January. This decline was part of a broader trend across the brokerage industry, with the cumulative active user base falling from 50.2 million to 48.9 million during the same period. However, Groww continues to maintain its leadership position in terms of active user count.
The Future of Groww in the Expanding Brokerage Market
The securities brokerage market in India is poised for significant growth, projected to reach a market size of $6.21 billion by 2030, with a compound annual growth rate (CAGR) of 8%. Groww’s expansion plans, strong investor backing, and upcoming IPO position it well to capitalize on this growing opportunity.
As Groww moves forward with its IPO plans, its ability to maintain operational profitability, expand its user base, and navigate regulatory and market challenges will be key factors in determining its long-term success. The upcoming months will be crucial as the company files its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) and finalizes the details of its much-anticipated public listing.
