Top Stock Market Course in India

Groww IPO - Top Stock Market Course in India

India's top stockbroker, Groww, has taken a bold step into filing confidential papers for an initial public offering (IPO) with SEBI. But here's the twist: despite a massive ₹3,145 crore in revenue, the company reported a net loss of ₹805 crore in FY24. This raises a crucial question for investors: Should you bet on a loss-making fintech giant?

In this blog, we decode Groww's IPO filing, break down the broking industry's shifting dynamics, highlight the risks, and, most importantly, show you how to analyze any IPO with the framework taught in LiveLong Wealth's Stock Market Course.

What Is a Confidential IPO Filing?

Groww has opted for SEBI's confidential pre-filing route, which allows companies to

1. Keep IPO details private while testing investor interest.
2. Adjust IPO size by up to 50%.
3. Extend the launch timeline from 12 to 18 months.

This method provides flexibility and reduces reputational risk if market conditions worsen.

Groww's FY24 Financial Snapshot

Let's look at the core numbers:

1. Revenue: ₹3,145 crore (119% YoY growth)
2. Operating Profit: ₹535 crore (17% growth)
3. Net Loss: ₹805 crore
4. (primarily due to a one-time ₹1,340 crore tax expense for shifting its legal base from the US to India)

While operationally profitable, the company still reports a net loss—something retail investors must evaluate with caution.

Why Is Groww Still Loss-Making?

Many high-growth startups defer profits to prioritize user acquisition and tech infrastructure. However, in Groww's case:

1. Marketing costs and platform investments are ongoing.
2. It took a hit from a one-time restructuring cost due to its domicile change.
3. Despite fee hikes, pricing pressures continue due to fierce competition.
4. Fewer day traders and more mutual fund investors generate less recurring brokerage revenue.

The Broking Industry in India:

India's online broking space is evolving rapidly, driven by:

1. SEBI's crackdown on F&O trading resulted in a 30% drop in volumes by December 2024.
2. Fee restructuring, with Groww increasing charges by 150% for smaller trades to maintain profitability.
3. Strong rivals like Zerodha, Angel One, and Upstox are dominating market share.

This highlights the need for brokers to innovate, reduce costs, and diversify revenue streams.

Key Risks of Investing in the Groww IPO

1. Regulatory Uncertainty: Changes in derivatives trading, transaction taxes, and compliance norms can impact revenues.
2. Sustainability of Growth: Acquiring users is easier than monetizing them—especially if pricing wars intensify.
3. Investor Expectations: Public markets expect clear roadmaps to profitability—something Groww hasn't fully demonstrated yet.

Growth Prospects: What's Working in Groww's Favor?

Despite the risks, Groww has strategic strengths:

1. 13 million+ active users—India's largest base.
2. Wide product offering-stocks, mutual funds, ETFs, F&O, and more.
3. Tech-first experience with a sleek UI/UX that appeals to younger investors.
4. Fresh capital from the IPO will likely go into product upgrades and geographic expansion.
5. Cross-selling personal loans

How to Analyze an IPO Like This - The LiveLong Wealth Way

At LiveLong Wealth's stock market course, we teach a structured framework to analyze IPOs using our stock market course, which includes:

1. Business Model Evaluation

1. Does the company have a moat?
2. How scalable is the model?

2. Financial Statement Analysis

1. Revenue trends, margins, cash flow, and debt levels.
2. One-time charges vs. recurring profitability.

3. Valuation Check

1. Compare IPO valuation with listed peers (e.g., Angel One).
2. Check price-to-sales, price-to-earnings (if profitable), and EV/EBITDA multiples.

4. Risk-Reward Profile

1. Is the IPO aggressively priced?
2. Can you tolerate a few years of losses for long-term upside?

This approach ensures you're not just following IPO hype but making data-driven investment decisions.

Final Verdict: Should You Apply for the Groww IPO?

If you're a long-term investor who believes in India's retail investing boom and the scalability of digital platforms, Groww offers exposure to a leading brand in the fintech space. But if you're valuation-sensitive and wary of profitless growth stories, this IPO might need more scrutiny.

Read more: https://www.livelongwealth.in/groww-ipo-top-stock-market-course-in-india/339