Groww Q2 Results: Margin Trading Boom Lifts Viability

Groww’s parent, Billionbrains Garage Ventures, released Q2 results showing the platform’s Margin Trading Facility (MTF) book and user metrics are scaling fast. The shares gained more than 7% to hit an intraday high of ₹168.39 apiece today. The quarter also showed a consolidated net profit of ₹471.4 crore on revenue from operations of ₹1,018.7 crore. How important is the MTF momentum for Groww’s path to higher monetisation and profits?

What The Numbers Tell Us About User Growth and Monetisation

Groww reported that total transacting users reached 19 million, up materially year-on-year, and total customer assets stood at about ₹2.7 lakh crore. These scale metrics matter because broking and wealth platforms monetise via order fees, interest from funded positions (MTF), and asset-linked fees from mutual funds and advisory. The company’s revenue from operations fell about 9.5% year-on-year to ₹1,018.7 crore, but net profit rose 12% YoY to ₹471.4 crore, showing the business can protect the bottom line even when some revenue lines are volatile.

MTF (Margin Trading Facility) is now a visible part of Groww’s monetisation mix. The funded MTF book grew from roughly ₹1,035.8 crore in Q1 to ₹1,668.3 crore in Q2, a sharp quarter-on-quarter jump. This growth increases gross interest income and can boost revenue per user, especially if MTF customers trade larger order sizes or remain active across multiple sessions. But MTF also brings credit and market risk, so careful risk controls are necessary.

The question remains: If monetisation is improving, why did revenue dip, and how did profit still rise?

How Did Groww Protect Profit While Revenue Softened?

Revenue fell year-on-year mainly because some high-frequency trading and derivative volumes, which generate more transactional revenue, were softer than in the prior year. At the same time, the company tightened costs and improved operating leverage: total expenses declined sequentially, helping EBITDA and net profit margins.

Management also highlighted higher “revenue per broking order” and a rise in average equity order value, both of which suggest deeper monetisation of active users. These efficiency gains led to a 12% jump in consolidated net profit, even without a revenue increase.

That said, MTF’s rapid expansion changes the risk profile. MTF is leveraged exposure: funded positions earn interest but can amplify losses for customers, trigger margin calls, and create operational complexity for the platform.

Investors should note how Groww manages provisioning, liquidation rules, concentration limits (how much exposure to a single stock), and underwriting standards for funded customers. Robust risk controls will be needed as the book scales further.

If risk management matters, what should investors track next to judge whether this is a durable upgrade to Groww’s business model?

What Should Investors Watch Next?

1. MTF growth and stickiness: Monitor the MTF-funded book next quarter and the trend in active MTF users. Fast growth is positive for revenue, but retention and repeat usage indicate product stickiness.
   
2. Credit and concentration metrics: Check disclosures (or analyst notes) on single-stock concentration in MTF, margin shortfall incidents, and any provisioning for customer losses. These will reveal how well Groww contains downside risk.
   
3. Revenue composition: Watch the split between broking, MTF interest, mutual-fund distribution fees, and other income. A move to a higher proportion of fee-recurring or interest income would change valuation metrics.
   
4. User economics: Keep an eye on revenue per user, average order value, and user acquisition cost. If customer acquisition costs rise, growth can become expensive.
   
5. Market and regulatory signals: Margin products can draw regulatory scrutiny if they create systemic risks. Investors should monitor any exchange or SEBI commentary on MTF usage and related guidelines.
   

Each of these items will influence whether MTF helps Groww build a steadier, higher-margin business, or whether volatility in volumes and credit risk offsets the gains.

Conclusion

Groww’s Q2 shows the platform is scaling its higher-value products: the MTF-funded book at ₹1,668.3 crore and 78,000 active MTF users are notable milestones, and net profit rose to ₹471.4 crore despite a fall in quarterly revenue. The central question now is: can Groww convert MTF growth and higher order values into a durable improvement in revenue quality and margins, while keeping credit and operational risks under control?

References

Moneycontrol
Zee Business
Businessworld