Rapid Growth: Analyzing the Surge in Active Investors at Groww and Angel One’s Race to Zerodha

Groww’s Investor Base Doubles, Reaches 11 Million Users in June

Bengaluru-based discount broker Groww has experienced significant growth, doubling its active investor base over the past year to nearly 11 million users in June, according to National Stock Exchange (NSE) data. In the same period last year, Groww had approximately 5.65 million users.

Despite the potential revenue impact from anticipated restrictions on futures and options (F&O) trading, the number of new demat accounts continues to rise rapidly.

In June, the total number of demat accounts reached 160 million, with a net addition of 4.2 million accounts. NSE data shows that the number of active investors slightly exceeds 40 million.

Most top discount brokers also saw substantial new active investors, with Groww alone adding over 550,000 users during the month. Mumbai-based Angel One added 220,000 active investors, while Zerodha gained 150,000 users.

Angel One has consistently added more users each month than Zerodha over the past year and is likely to surpass it soon.

Interestingly, most traditional full-service brokers, primarily backed by banks, have experienced minimal growth since the rise of discount brokers over the last decade. However, SBICAP Securities, backed by the State Bank of India, saw its active investors reach 920,000 in June, up from 560,000 the previous year, marking a 64% growth.

Potential F&O Restrictions and Their Impact

Top discount brokers are preparing for a potential 30-40% hit to their topline due to recent regulatory actions.

F&O traders, while comprising only 10-20% of the overall active client base, generate 60-80% of revenue for most top discount brokers.

The Securities and Exchange Board of India (SEBI) has mandated that brokers charge a true-to-label fee, preventing larger brokers from receiving rebates or passbacks from exchanges for higher trading volumes. This directive could reduce discount brokers’ revenue by around 20%.

Additionally, SEBI plans to implement changes to curb F&O trading on Indian exchanges, such as allowing only one weekly options contract per exchange and setting a minimum lot size of Rs 20-30 lakh. These changes could further impact their topline by another 20%.