According to ET Now, Billionbrains Garage Ventures announced its Q2FY27 results on Wednesday, October 14, with the company reporting strong year-on-year growth across key metrics. However, the stock price fell around 1% after the company reported its quarterly performance for Q2FY27, indicating mixed market reaction to the results. This represents a contrast to the positive investor sentiment seen in the previous session, with the market showing caution about the quarterly performance despite strong annual growth.
As reported by NDTV Profit, Groww experienced a marginal sequential decline in both revenue and profit for Q2FY27, with net profit falling 1.3% quarter-on-quarter to ₹725 crore from ₹735 crore in the previous quarter, and revenue declining 0.5% to ₹1,541 crore from ₹1,549 crore. However, on a year-on-year basis, the company delivered robust growth with net profit rising 53.93% from ₹471 crore in Q2FY26 and revenue increasing 43.88% from ₹1,071 crore, indicating that the sequential slowdown has not derailed the company's broader growth trajectory. The sequential decline occurred despite tailwinds of five more trading days and no Indian Premier League (IPL)-related marketing costs, highlighting the company's high dependence on equity derivatives.
According to NDTV Profit, equity derivatives revenue declined 14.3% quarter-on-quarter in Q2FY27, with management attributing most of the fall to SEBI's introduction of the Closing Auction System (CAS) effective August 3, 2026. The equity derivatives share of revenue has fallen over three consecutive quarters, from 54.8% in Q4FY26 to 51.9% in Q1FY27 and 44.8% in Q2FY27, down from 56.9% in Q2FY26. During the initial adoption phase, a disparity emerged between the 3:15 pm reference price and the equilibrium price published from 3:20 pm, contributing to a decline in trading volumes across the industry. Broking orders fell by 7.7% to 517.3 million, with the closing auction session (CAS) mechanism exacerbating already weak sentiment in equities. However, recent activity suggests the trading community has adjusted to CAS changes, with trading activity in equity derivatives options recovering from ₹7.4 trillion in August to ₹9.4 trillion in September, as per National Stock Exchange data.
According to NDTV Profit, Groww demonstrated robust user acquisition with 11 lakh new transacting users added in Q2 FY27, supported by primary-market activity. The company's total transacting users reached 2.4 crore, up 27% year-on-year. Total customer assets increased to ₹3.9 lakh crore, up 46% year-on-year. Stocks average daily turnover (ADTO) was ₹14,430 crore, up 42.46% from ₹10,129 crore in the previous quarter, indicating strong trading activity recovery. Equity derivatives premium ADTO declined to ₹12,322 crore, down 21% quarter-on-quarter from ₹15,661 crore, while derivatives turnover increased 28.70% to ₹12,322 crore and MTF grew 160.85% YoY to ₹4,351 crore. A nearly 5% rise in stock active users to 12.7 million might not matter much unless they trade more meaningfully.
As reported by NDTV Profit, Groww continued its successful diversification strategy with equity derivatives revenue share declining to 44.8% in Q2FY27 from 56.9% in Q2FY26, while commodity derivatives increased to 6.2% from 0.2% and MTF income rose to 10.1% from 7.4%. Stocks category share increased to 17.4% of revenue in Q2FY27, compared with 16.1% in Q1FY27 and 15.6% in Q4FY26. Commodity brokerage income and equity cash brokerage income increased by 26% and 7.5% on-quarter to ₹95 crore and ₹268 crore, respectively, yet overall brokerage income fell by 6.6% to ₹1,054 crore as equity derivatives brokerage, which contributed 65.5% of brokerage income, fell 14% to ₹690 crore. The company noted that contribution of equity derivatives to total income declined year-on-year, reflecting market adjustments following the introduction of the Closing Auction System (CAS), but expects recovery once SEBI's consultation paper recommendations are implemented.
According to NDTV Profit, Groww is taking steps to lower its reliance on equity derivatives, reflected in more than doubling of other operating income to ₹73.9 crore. While details of other operating income are not available, growth seems to be aided by wealth management, as Groww AMC's revenue was just ₹4 crore. Fund-based income, comprising interest income on loans under various heads such as margin trading facility (MTF), loans against shares (LAS), and personal loans (PL), grew 7% on-quarter to ₹415 crore. Cash market turnover contribution from MTF is slightly above 5% in Q2FY27, with an increase in MTF value not necessarily meaning higher brokerage income as Groww charges fixed brokerage per order (capped at ₹20 per order). The company is also working on providing access to trading in US stock markets, but the timeline is not yet finalized, with brokerage for US stocks likely to be a percentage of value rather than fixed per order. Brokers, including Groww, face another challenge if the merchant discount rate (MDR) is introduced on Unified Payments Interface (UPI) transactions, with MDR capped at ₹300 per transaction.
According to Bloomberg consensus estimates, investors have assigned a rich price-to-earnings multiple of 40 to Groww, which is closer to the multiples enjoyed by exchanges such as BSE and NSE. Exchanges operate in an almost duopoly structure, while Groww has multiple rivals. Groww must maintain its faster growth to prevent the Street from dragging down its valuation multiple to that of comparable peers, such as Angel One, which trades at a 21 price-to-earnings multiple. The company's Groww AMC delivered exceptional performance with Assets Under Management (AUM) growing 145% year-on-year from ₹2,928 crore to ₹7,179 crore, with the share of actively managed AUM increasing from 47% to 57%. The company also scaled up its newer businesses, with assets under management (AUM) of its wealth business crossing ₹10,000 crore at the end of September.
