Groww’s latest quarterly results reveal a significant shift in how new users engage with the platform, with mutual funds and ETFs becoming the primary gateway over direct stock trading, influenced by regulatory actions and market conditions.
- F&O trading penetration dropped from 18% to 10% since November 2024
- New SIPs on mutual funds surged 61.5% year-on-year in Q4 FY26
- Commodity derivatives and margin lending gaining traction with increased user base
What happened
Groww has experienced a notable reduction in the share of customers engaging in futures and options (F&O) trading, dropping to 10% penetration as of March 2026, down from 18% in late 2024. This decline follows regulatory changes implemented by SEBI aimed at tightening controls on equity derivatives. Concurrently, the company reported an 88% year-on-year revenue increase to Rs 1,505.4 crore in Q4 FY26, driven by growth in newer verticals.
Prolonged market volatility, intensified by geopolitical issues such as the West Asia conflict, has influenced how new users discover Groww. The company highlighted a pivot in the acquisition funnel, with more users entering through mutual funds and ETFs rather than direct stock trading. New Systemic Investment Plans (SIPs) grew substantially, with 56.21 million new SIPs created, representing a 61.5% increase compared to the prior year.
Why it matters
The shift from F&O and direct stock trading toward mutual funds and ETFs signals changing investor preferences amid market and regulatory pressures. While equity derivatives still account for a majority of revenue, their share has declined, prompting Groww to diversify into commodities trading, lending, and wealth technology services to sustain growth and reduce dependency on any single segment.
The rising adoption of mutual funds and ETFs as entry points can lead to a more stable asset under management base, particularly driven by SIP inflows. Groww’s growing presence in commodities and margin trading facilities also indicates efforts to capture new growth areas, with commodity derivatives users increasing over 50% in a quarter and MTF volumes rising nearly 4.5 times year-on-year.
What to watch next
Groww’s ability to scale its commodities trading segment will be critical, as it is still in the early stages of user adoption. Continued growth in this vertical could help offset slower growth or regulatory risks in equity derivatives. The company’s expanding margin trading facility market share during a volatile period also suggests opportunities for increased revenue concentration in leveraged products.
Investors and market watchers should monitor how Groww manages profitability pressures in newer ventures like asset management and lending, which currently show losses. Additionally, how SEBI’s ongoing regulatory framework evolves will impact the platform’s product strategy and customer engagement moving forward.