Groww beat every odd to get here. Now what?

Good Morning [%first_name |Dear Reader%],

You are reading the Two by Two newsletter—a weekly commentary on the most important business stories around you

Broadly speaking, Two by Two is a podcast (and newsletter!) about companies that find themselves at a specific point where they are confronted with imminent, and often complicated, obstacles. 

If you had to draw it as an (admittedly basic) chart, it looks something like this:

But of late, I’ve started being drawn to companies that are at their most successful point ever, and are now figuring out how to make that success continue to count.

So the diagram looks a bit like this:

Groww is one of those companies. 

In fact, there’s a good argument to be made that it’s arguably India’s most successful consumer technology company and hasn’t really gotten its due. Consider the fact that it was founded in 2016 by four ex-Flipkart engineers in a Bengaluru apartment with no pedigree or experience in finance and no distribution muscle. And from that point in less than a decade, it became India’s largest stockbroker by active clients, ahead of ICICI Direct, HDFC Securities, Zerodha*, and every legacy player that had decades of head start.

There’s more. It was also the first Indian unicorn to reverse flip, i.e., it moved its holding company from Delaware back to India, and paid Rs 1,340 crore in taxes for the privilege of doing it. Despite this, it was profitable when it listed, with its IPO subscribed 17X over. And even during the current market conditions, Groww, a company that derives its fundamental value from the attractiveness of India’s equity market, still trades at a considerably higher premium, with its stock price doubling since the IPO.

If you’re still unconvinced, then I’ll make the closing argument, i.e., the financials themselves. 

Last year, Groww reported Rs 3,902 crore operating revenue, a 11X growth in just three years. 

Oh, and finally, it reported Rs 1,824 crore in net profit, making it the most profitable consumer internet company in India (except Zerodha).

Groww is at its most successful ever. All the decisions it made along the way—to become a direct mutual funds platform, to start lending, to reverse flip—seemed unusual when it was making them, but now seem totally obvious in retrospect. So much so that fintech companies like Phonepe, Dream11, and Jio Financial Services are now rushing towards becoming a stock broking platform, while Groww is equally confidently moving beyond it, calculating where the puck should be, instead of where it is right now. 

Some of those decisions are things like building itself a wealth management platform, or towards margin funding trading (MTF), and even bulking up its lending business. It also gave up its payment license. These are unusual decisions, and yet, Groww is making them, convinced that it can become many things for many people. A destination. A super app. A behemoth. 

Today’s episode is about how Groww got here, and where it’ll go next. 

And to do this, I’ve sat down with Anand Kalyanaraman, finance editor of The Ken, who has tracked Groww since its earliest days, and Avinash Luthria, founder of Fiduciaries and one of eight SEBI-registered investment advisors who charges only an hourly fee. I come in with the premise that Groww is the most consequential company ever from India. They come in with theirs, and well, we disagree, like all great Two by Two episodes. 

I’ll let you listen to the episode, but first, here are the two most interesting quotes from it to convince you it’s worth your time.

Here’s Anand about Groww’s current stock price:

And Avinash, who has a much more interesting counterview:

It’s a great episode. You can listen to it here. 

Regards,
Praveen Gopal Krishnan 

*Zerodha’s perennial fund, Rainmatter Capital, is an investor in The Ken