Billionbrains Garage Ventures, the parent of stockbroking platform Groww, reported a marginal sequential decline in revenue and profit for the September quarter as the introduction of the Closing Auction System (CAS) continued to weigh on equity derivatives activity. However, management expects the proposed changes under the Securities and Exchange Board of India's (SEBI) consultation paper to help normalise trading activity, while growing contributions from margin trading facility (MTF) and commodity derivatives offer some diversification.
The company's net profit declined 1.4% quarter-on-quarter to Rs 724.70 crore in second quarter of this fiscal from Rs 735 crore in the previous quarter. Revenue fell 0.5% to Rs 1,541 crore from Rs 1,549 crore over the same period.
On a year-on-year basis, however, Groww delivered robust growth. Net profit rose 53.93% from Rs 471 crore in Q2FY26, while revenue increased 43.88% from Rs 1,071 crore, indicating that the sequential slowdown has not derailed the company's broader growth trajectory.
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The pressure was most visible in equity derivatives, whose contribution to revenue has declined over the past two quarters. Management attributed much of the sequential fall in derivatives revenue to CAS, while expressing confidence that the proposed regulatory changes could support a recovery.
Equity Derivatives Revenue Falls Sequentially
Groww said revenue from equity derivatives declined 14.3% quarter-on-quarter in quarter ended September, with management attributing most of the fall to the introduction of CAS. In its investor presentation, the company said the contribution of equity derivatives to total income declined 12.2 percentage points year-on-year, reflecting market adjustments following the new system. It added that it expects the contribution to recover once recommendations in SEBI's consultation paper are implemented.
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The equity derivatives share of revenue has fallen over three consecutive quarters, from 54.8% in Q4FY26 to 51.9% in Q1FY27 and 44.8% in Q2FY27. In Q2FY26, the segment accounted for 56.9% of revenue. The decline highlights the extent to which regulatory changes affecting derivatives trading can influence the revenue mix of online brokerage platforms, even as other businesses expand.
How CAS Affected Trading Activity
Effective August 3, 2026, SEBI introduced CAS for stocks eligible for futures and options trading. The system replaced the earlier volume-weighted average price (VWAP) method with a closing auction running from 3:15 p.m. to 3:35 p.m. According to Groww, during the initial adoption phase, a disparity emerged between the 3:15 p.m. reference price, based on the VWAP from 3 p.m. to 3:15 p.m., and the equilibrium price published from 3:20 p.m. The difference contributed to a decline in trading volumes across the industry.
In its shareholder letter, management said the fall in Groww's equity derivatives revenue was in line with the broader industry trend. SEBI's consultation paper proposes delinking derivatives settlement from CAS closing prices. Groww believes implementing the proposal should help normalise trading activity and support a recovery in equity derivatives revenue.
However, the timing and extent of any recovery will depend on the final regulatory framework and how market participants adjust to the revised settlement mechanism.
MTF, Commodity Derivatives Gain Share
As equity derivatives face pressure, Groww is seeing a rising contribution from other products, particularly MTF and commodity derivatives. MTF allows investors to buy eligible shares by funding part of the purchase through borrowing, while commodity derivatives provide exposure to commodity-linked futures and options contracts.
MTF's contribution to revenue rose to 10.1% in second quarter from 8% in the first quarer and 6.9% in fourth quarter of the previous fiscal. In second quarter of fiscal 2026, it accounted for 7.4% of revenue. Commodity derivatives' contribution increased to 6.2% in Q2 of this fiscal from 4.9% in Q1 and 4.5% in fourth quarter of the previous fiscal. The segment accounted for just 0.2% of revenue in the second of fiscal 2026.
Stocks also gained share, contributing 17.4% of revenue in Q2FY27, compared with 16.1% in Q1FY27 and 15.6% in Q4FY26.
Management said it expects less-penetrated products, particularly MTF and commodity derivatives, to contribute more in the coming quarters. The shift could help reduce Groww's dependence on equity derivatives, although it does not necessarily eliminate the impact of regulatory changes on the core brokerage business.
Trading Activity Remains Strong Despite CAS
Despite the sequential moderation in revenue and profit, Groww reported strong year-on-year growth in trading activity. Stock average daily turnover (ADTO) increased 42.46% to Rs 14,430 crore from Rs 10,129 crore. Derivatives turnover rose 28.70% to Rs 12,322 crore, while MTF grew 160.85% to Rs 4,351 crore.
The company reported 2.4 crore total transacting users, while total customer assets increased 46% year-on-year to Rs 3.9 lakh crore.
These figures indicate that the platform continued to expand its user base and customer assets even as changes to the derivatives market weighed on the contribution of its largest revenue segment.
Groww AMC AUM Rises 145%
Groww's asset management business also reported strong growth during the quarter. Groww Asset Management Company's assets under management (AUM) rose 145% year-on-year to Rs 7,179 crore from Rs 2,928 crore. The share of actively managed AUM increased to 57% from 47%. Revenue for the AMC grew 131% year-on-year, although it reported a net loss of Rs 8.3 crore.
The expansion of the asset management business provides another avenue for diversification beyond brokerage-led income. However, the segment's contribution to overall profitability will depend on continued AUM growth and its ability to improve operating economics.
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