Stock-broking application Groww has officially received approval from the market regulator, theSecurities and Exchange Board of India (SEBI), to proceed with an initial public offering (IPO) aimed at raising between $800 million and $1 billion. The Bengaluru-based investment platform's parent company, Billionbrains Garage Ventures Pvt. Ltd,had initially filed a confidential draft red herring prospectus with SEBI on May 26. JPMorgan Chase & Co. and Kotak Mahindra Bank Ltd have been appointed as the bankers to manage this significant public offering.

This move comes at a challenging time for India's leading discount brokerages, including Groww, Zerodha, Angel One, and Upstox, which have collectively experienced a significant downturn. Data from the National Stock Exchange (NSE)indicates that these platforms lost nearly 2 million active investors in the first half of 2025. June alone saw a net withdrawal of 600,000 clients from these brokerages. Specifically, Groww shed 600,000 clients, while market leader Zerodha saw 550,000 users exit. Angel One and Upstox also reported substantial declines, losing 450,000 and just over 300,000 clients, respectively.

Photo Credit: The Economic Times

The decline in active investors is largely attributed to a decrease in retail interest, particularly in the derivatives market, following stricter regulations imposed by SEBI on trading in futures and options (F&O). These regulatory changes include stricter margin rules, shorter contract expiries, tighter eligibility requirements for traders, and increased taxes, which have collectively reshaped the trading landscape, making it less appealing for casual investors.

Kranthi Bathini, director at WealthMills Securities, commented on the situation, stating that while the tighter F&O norms would likely impact trading volumes in the near term, this is an industry-wide adjustment. He also noted that historically, retail volumes tend to shrink during volatile periods but expressed optimism that activity would strengthen over time, given today's digital-first ecosystem and the broader financialization of assets in India.

Retail investors, often sensitive to short-term gains and market stability, appear to be pulling back after an extended period of speculative activity, which was fueled by India's post-COVID market rally. Many new individual investors had been drawn by the promise of quick profits. However, the combination of stricter regulations, volatile expiry sessions, and muted near-term returns has led a segment of this investor base to temporarily step aside.

Bathini reiterated that this slowdown is a short-term phenomenon, with retail activity and new account openings typically declining during volatility. Yet, he emphasized the phenomenal growth over the past five years and the vast opportunities ahead, as equity penetration in urban and semi-urban India remains in its early stages.

Despite the broader market challenges, Groww has demonstrated strong financial performance and successfully attracted significant investment. In June, the company completed a funding round of $200 million, achieving a valuation of $7 billion. This round saw investments from Singapore’s sovereign wealth fund GIC and existing backer Iconiq Capital. Prior to this, Viggo Investment Pte., an investment arm of GIC, had sought approval from the Competition Commission of India to acquire a 2.143% stake in Groww.

Photo Credit: Outlook Business

Groww's institutional investors include prominent names such as Y Combinator, TigerGlobal, Ribbit Capital, and Peak XV Partners. Its angel investor roster features high-profile individuals like Microsoft chief executive Satya Nadella and Myntra co-founder Mukesh Bansal, underscoring strong confidence in the fintech startup's potential.

Financially, Groww reported a substantial jump in profit, reaching ₹1,819 crore in the 2024-25 fiscal year, up from ₹545 crore in FY24. The FY24 profit figure was notably impacted by a one-time domicile tax payment of ₹1,340 crore. Furthermore, the company's revenue saw a significant increase, jumping 31% to ₹4,056 crore, highlighting its robust growth trajectory amidst a dynamic market environment.