Groww founders eye $1.9 billion wealth boost as online broker heads for IPO

By Anto Antony, Alex Gabriel Simon and Advait Palepu

 

Lalit Keshre remembers how hard it was to buy his first stock for less than a dollar as a student in Mumbai in 2002.

 

After working at several ventures, he co-founded online broker Groww nine years ago with three colleagues from Flipkart, one of India’s biggest e-commerce firms.

 

Groww, slated for an initial public offering next week, is now poised to leave the quartet with stock worth over $1.9 billion at the top end of the price band. The value of Keshre’s stake alone will be worth over $650 million, based on the issue size and calculations from the prospectus. The stakes of the other three founders — Harsh Jain, Ishan Bansal and Neeraj Singh  — will be valued at about $1.2 billion, according to calculations by the Bloomberg Billionaires Index. 

 

 

India’s biggest broker by users has thrived even as regulatory curbs and weaker retail enthusiasm hurt competitors Zerodha and Angel One Ltd. Groww’s profits tripled in the year through March and rose another 12 per cent in the June quarter, defying a 40 per cent industry-wide plunge in new retail broker account openings.

 

“India’s young population and growing incomes give a long runway,” Keshre, 44, who is also chief executive officer, said in an interview.  

 

The Bengaluru-headquartered firm is seeking to raise ₹1,060 crore, while existing investors plan to sell as many as 557.2 million shares. The offering will open to public investors from Nov. 4 to Nov. 7 at an advertised price range of ₹95 to ₹100. 

 

The IPO — among the year’s largest — will test investor appetite amid shifting market sentiment and rising competition in the industry. Shares of Angel One Ltd — a listed rival — have slumped 14 per cent this year as India’s options trading boom fizzled out. 

 

The market regulator’s curbs on derivatives trading beginning about a year ago has hit volumes and led to a fall in profit at privately-owned rival Zerodha Broking Ltd. Another order by the Securities and Exchange Board of India late last year also threatened the industry’s business model, centered around offering heavy discounts on broking fee to attract clients.

 

Billionbrains Garage Ventures Ltd., which operates Groww, has suffered too. Growth in net transacting users on its platforms has slowed to 760,000 in the three months through June from 1.67 million last year, according to its draft IPO papers. That’s a risk considering the firm derives majority of its revenues from broking. 

 

Keshre is betting on a diverse product portfolio, that includes mutual funds, credit and wealth management to help make the business less cyclical. “Our eventual goal is to have all kinds of products for Indians to manage their wealth,” he said.

 

Groww’s cost of acquiring new clients is well below that of rivals like Angel One, giving it better profit margins, according to Nuvama Wealth Management Ltd., a local brokerage. Also, Groww has been able to increase revenues from clients at a faster pace compared to rivals, it said in a note this week.

 

The company has a base of more than 14 million active clients. Its profit for the 12 months through March rose threefold compared to the prior year, outstripping listed rival Angel One’s 4 per cent growth in the same year. 

Farming Village

Born in the small farming village of Lepa in Madhya Pradesh, Keshre is a graduate from the Indian Institute of Technology, Bombay — one of the nation’s top tech colleges. He built his career in engineering before ditching a lucrative job at Walmart Inc.-backed Flipkart in 2016.

 

Groww’s registered customers today cover more than 98 per cent of the country’s postal codes, underscoring how cheap mobile data and rising financial literacy has fueled investing beyond major cities. The broker in particular has benefited from technology after its rivals faced scrutiny over tech-related glitches frequently.   

Groww’s share of revenues from broking is now just below 80 per cent, compared with 90 per cent in March 2024. It has ramped up its credit business over the past year, funding clients’ share purchases and offering loans against their equity holdings.

 

On the wealth side, it’s expanding advisory and alternative asset offerings for affluent clients. Stocks now attract a majority of new users and often pull them into mutual funds, while ETFs’ share of transacting clients is also climbing, Keshre said.

 

India’s populous hinterland, though, remains in the early stages of investing. Keshre says even his family has only recently warmed up to investing in stocks. “My mom started using Groww last year,” he said.