Groww Q2 FY26: Profit Growth Amid Revenue Pressure

Groww Q2 FY26: Profit Growth Amid Revenue Pressure

Groww reported a softer top line but a stronger bottom line in Q2 FY26. Revenue from operations fell year-on-year, yet PAT rose materially due to operating leverage, lower one-offs compared with the prior year and a healthier revenue mix. The quarter highlights how Groww’s business model is maturing, even when top-line growth slows, profitability remains resilient.

*Headline numbers (consolidated)*
* Revenue from operations (Q2 FY26): ₹10,187.42 mn
* Other income: ₹520.55 mn
* Total income: ₹10,707.97 mn
* Total expenses: ₹4,325.99 mn (includes employee benefits, finance costs, depreciation, other expenses)
* Profit before tax: ₹6,376.77 mn
* Profit after tax (PAT): ₹4,713.39 mn
* EPS (basic): ₹0.79
Revenue for the same quarter last year (30 Sep 2024) was ₹11,253.87 mn — so revenue declined ~9.5% YoY, while PAT rose ~12% YoY (from ₹4,201.60 mn to ₹4,713.39 mn).

*Why revenue fell but profit rose*
Groww highlights that the revenue decline was driven by changes in derivatives and “true-to-label” regulations which reduced derivatives revenue. However, higher contribution from Stocks, MTF, LAS and interest income helped offset some of that fall. The company also notes pricing changes and higher average order values (stock order AOV up 66% YoY to ₹59,079) improved yield per order.
Groww’s model attributes a large share of incremental revenue to bottom line because many costs are fixed. The company explains that since over 90% of its costs do not increase directly with revenue, any improvement in certain high-margin revenue streams leads to a larger rise in profits, resulting in higher PAT margins. For Q2 FY26, Groww reports a PAT margin of ~44%.
Management states that Q2 last year had an impact from a one-time long-term incentive provision (~₹1,593 mn) which distorts simple YoY PAT comparisons. Adjusting for that, the company says PAT would have moved more in line with revenue.

*Platform and product KPIs*
* Active users: Grew 3.2% QoQ, with new acquisitions contributing ~4.5% of the incremental revenue growth in the quarter.
* Revenue mix shift: Stocks, Margin Trading Facility (MTF) and LAS (loan against securities) saw rising shares. Derivatives’ share fell ~10% points YoY. Management expects the Fisdom acquisition to contribute approximately 3–4% to Revenue from Operations based on the current run-rate.
* MTF scale: Active MTF users rose to 78k and the net funded MTF book reached ₹16,683 mn (market share ~1.7% in that segment).

*Cash, balance sheet and M&A*
Groww generated ₹4,713 mn in earnings in Q2 (which management describes as cash generated), but the closing cash balance fell to ₹35,990 mn from an opening ₹38,197 mn — largely due to ₹9,610 mn paid for the acquisition of Fisdom, and deployments into MTF/ LAS and working capital. Total assets stood at ~₹136,768.85 mn as of 30 Sep 2025 (showing significant financial assets and customer-linked balances).

*Strategic implications*
As the derivatives channel stabilises under new rules, QoQ revenue could improve. Meanwhile, Stocks, MTF and LAS are scalable revenue engines and appear to be gaining traction.
Groww’s PAT margin is high because of operating leverage and a favourable mix. However, discrete investments (branding, higher CAC periods) and one-offs can fluctuate quarterly margins. Management suggests looking at annualised PAT margin rather than quarter-to-quarter moves.
The Fisdom purchase is modest in size relative to the balance sheet but strategic for wealth offerings. Successful integration and cross-selling into the growing and affluent user segment will be key to sustaining revenue growth.

*Conclusion *
Groww’s Q2 FY26 shows a platform navigating revenue pressure from regulation and product mix changes, yet delivering stronger profitability through scale and higher-yield offerings. If the company continues to build its Stocks, MTF and LAS segments and integrates Fisdom efficiently, it can convert this momentum into steadier long-term revenue growth. Otherwise, results may stay profitable but uneven.

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