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

Nextbillion Technology (Groww), the venture capital-backed broking outfit, has dislodged Zerodha Broking as India’s largest brokerage in terms of number of active clients. At the end of September, Groww had 6.63 million active clients, nearly 150,000, or 2.3 per cent more than Zerodha, 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 provided by NSE, the country’s top bourse.

At the end of August, Zerodha had 6.32 million active investors, while Groww’s figure was at 5.99 million.

A record number of IPOs and strong momentum in the secondary markets led to an addition of over three 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.

At the end of September, however, NSE had only about 33.4 million active clients: Those who trade at least once during a 12-month period. Groww’s share in total active NSE clientele is about 19.9 per cent, while Zerodha is closely behind with 19.4 per cent market share.

Despite Zerodha ceding its top place, it 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.

As per news reports Nextbillion Technology had seen its top line zoom three times to Rs 1,294 crore in FY23. This helped the company clock net profit of Rs 73 crore from a loss of Rs 239 crore in FY22.

Most brokerages deploy aggressive strategies to on board new clients. During the account opening boom of 2021-22, many brokerages spent up to Rs 2,000 (per investor) to onboard new investors. 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.