Groww topples Zerodha to become largest broker in terms of no. of clients

Nextbillion Technology (Groww), the venture capital-backed broking platform, has dislodged Zerodha Broking as India’s largest brokerage in terms of number of active clients.

Groww had 6.63 million active clients at the end of September, as against Zerodha’s 6.48 million, ending the latter’s long run at the top.

AngelOne and RKSV Securities (Upstox) were ranked third and fourth with 4.86 million and 2.19 million active clients, according to data available on the National Stock Exchange (NSE).

At the end of August, Zerodha and Groww had 6.32 million and 5.99 million active investors, respectively.

A record number of IPOs and strong momentum in the secondary market led to an addition of over 3 million demat accounts for a second straight month in September.

Close to 6.2 million demat accounts were added in the past two months, taking the total to 130 million — about 10 per cent of the country’s population.

However, the NSE had only 33.4 million active clients (those who trade at least once during a 12-month period) at the end of September.

Groww’s share in the total active NSE clientele was about 19.9 per cent, while Zerodha was closely behind with 19.4 per cent share.

Lalit Keshre, founder and CEO, Groww, said customers’ trust in a “young company” and the digital public infrastructure had contributed to its ascent to the top.

“There is a long way to go. We will strive to build a sustainable and enduring business in the long term, and we are just getting started,” he wrote on X, formerly Twitter.

Despite losing top spot, Zerodha remains the country’s most profitable brokerage by far. In FY23, Zerodha clocked a net profit of Rs 2,907 crore on revenues of Rs 6,875 crore.

Zerodha’s margins (profit before tax or PBT/revenue), if one excludes the pass-through exchange transaction charges, are a staggering 70 per cent.

Groww had seen its top line zoom three times to Rs 1,294 crore in FY23.

This helped the company swing to a profit of Rs 73 crore from a loss of Rs 239 crore in FY22.

The move by the government and regulator to onboard new clients through e-KYC has given a fillip to the broking industry. Also, mobility restrictions, shift to the work-from-home set-up, increase in mobile and data penetration, and a drop in brokerage rates too have contributed to the industry’s success.

After the Covid-19 pandemic, the demat tally has grown more than threefold.

To corner these new investors, most brokerages deployed aggressive strategies. During the account opening boom of 2021-22, many brokerages spent up to Rs 2,000 per investor to onboard them.

However, the move doesn’t always yield results as many clients just open a trading account but execute barely any trades.

Zerodha, which pioneered the era of discount broking, largely refrains from such aggressive strategies, helping protect its bottom line.

“We continue to be the only broker in the country to charge an account opening fee… Collecting an account opening fee right at the start also, in a way, helps set this expectation with a potential customer, filtering out users who may not be serious about trading or investing with us,” said the company in a blog post last month.

According to Groww’s website, for the brokerage, trading and demat opening and maintenance charges remain zero.

Zerodha, on the other hand, charges Rs 200 for online account opening. It also charges for value-added services.

The charges for intra-day and F&O trades for both top players are largely similar at Rs 20 per executed order.