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Groww Shows Mixed Performance in Q2 FY26

Groww has reported a profitable yet inconsistent second quarter of FY26, achieving increased earnings while facing mounting pressures across revenue, user activity, customer acquisition costs, and cash reserves, as outlined in its Q2 FY26 shareholders’ letter shared with the exchanges. The total income for the quarter stood at Rs 1,071 crore, with a profit after tax of Rs 471 crore, marking a 12% year-on-year growth on paper. Nonetheless, the growth is not as robust as it appears. A one-time long-term incentive provision of Rs 159.3 crore, recorded in the previous year, was reversed later. When accounting for that reversal, the actual PAT would have declined by 12–13% year-on-year, paralleling the drop in operating revenue. Revenue from operations decreased by 9% year-on-year to Rs 1,019 crore, primarily due to a decline in derivatives activity following SEBI’s true-to-label circular.

User Activity Under Strain

User momentum is also facing challenges. Groww’s active clients on NSE reduced to 11.9 million, down from 13.2 million earlier this year. This trend indicates a wider correction within the industry, with the total NSE active base decreasing from 50.2 million in January 2025 to 45.3 million by the conclusion of Q2. Groww remarks that this metric is a lagging indicator and noted early signs of recovery in October, where its market share slightly increased to 26.6%, compared to 25.6% the previous year. Total transacting users experienced a sequential growth of 5%, reaching 19 million, while total customer assets rose by 2% to Rs 2.7 trillion.

Impact of Fisdom Acquisition

The financial implications of Groww’s acquisition of Fisdom, completed in October, also influenced the quarter. The company disbursed Rs 961 crore for this acquisition, which is reflected in its balance sheet. Fisdom, which generated Rs 166 crore in revenue last year, is expected to contribute to Groww’s revenue starting next quarter, potentially adding an estimated 3–4% to operating income.

Rising Customer Acquisition Costs

On the cost side, Groww’s expenditure to acquire customers increased by 23% year-on-year and 15% sequentially to Rs 125 crore, mainly driven by a 48% surge in performance marketing spending. While branding costs decreased, overall customer acquisition expenses rose sharply. Groww’s customer acquisition cost for H1 FY26 reached Rs 1,374, a significant increase from Rs 796 during the same period last year.

Cash Reserves and Product Expansion

Despite posting healthy profits, Groww’s cash reserves decreased by 6%, falling from Rs 3,819 crore to Rs 3,599 crore. The decline was attributed to heightened investment in its margin trading facility and loan against securities, as well as debt repayments and cash outflow related to the Fisdom acquisition. Additionally, Groww has broadened its product offerings. Commodity derivatives, launched in phases in September, garnered early engagement with 7,000–8,000 daily active users, though their revenue contribution remains under 1%. The company also introduced 915, a desktop-first terminal for advanced traders, and continued to expand its footprint in fixed-income products, securing 5–6% retail market share in Bond IPOs.

Overall, the second quarter for Groww presented a contradictory scenario of increasing profitability alongside weakening operational momentum. Revenue faced a decline, user activity weakened, customer acquisition costs escalated, and cash reserves diminished. With Fisdom’s integration commencing next quarter and expansion in high-yield lending and trading products, the upcoming months will be crucial to determine whether Groww can maintain its high-margin profile in a cooling retail investment landscape.
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