Groww IPO Faces Headwinds as Regulatory Changes Impact F&O Revenue

Groww, a popular online investment platform, is gearing up for its initial public offering (IPO) amidst a challenging regulatory landscape that could potentially impact its revenue streams. The company is seeking a valuation of ₹60,000 crore at the upper price band of ₹95-100 per share, translating to a price-to-earnings (P/E) multiple of 34-44x based on FY25 earnings projections.

Regulatory Hurdles in F&O Segment

The Securities and Exchange Board of India (SEBI) has implemented several measures to regulate the futures and options (F&O) segment, which has been a significant revenue generator for Groww:

Curbing expiry days
Raising entry requirements
Imposing position limits
Considering further restrictions on weekly expiries

These regulatory changes pose a potential threat to Groww's business model, as approximately 62% of the company's broking revenue in FY25 came from F&O trading.

Financial Performance

Groww's recent financial performance reflects the impact of these regulatory changes:

Metric	Change (YoY)
Brokerage Revenue	-18%
Total Sales	-10%

Despite the decline in revenue, there are some positive indicators:

Metric	FY24	FY25
Average Revenue per User	₹2,520	₹3,339

Diversification Efforts

To mitigate the impact of regulatory changes, Groww is diversifying its revenue streams:

Expanding into margin trading
Focusing on mutual funds
Venturing into lending
Developing wealth management services
Recent acquisition of Fisdom, enhancing its product offerings

IPO Details

Aspect	Details
Valuation Sought	₹60,000 crore
Price Band	₹95-100 per share
P/E Multiple	34-44x FY25 earnings
Planned Use of Proceeds	₹152 crore for cloud infrastructure investment

As Groww navigates through these regulatory challenges and prepares for its market debut, investors will be closely watching how the company adapts its strategy to maintain growth and profitability in a changing financial landscape.

Billionbrains Garage Ventures Ltd., the parent company of the popular online trading platform Groww, has made a significant splash in the Indian capital markets with its upcoming Initial Public Offering (IPO). The company has received an overwhelming response for its anchor book, attracting bids worth over ₹50,000 crore from major investors.

Anchor Book Details

The ₹2,950.00 crore anchor book has garnered interest from a diverse group of institutional investors, including:

Norges Bank
Abu Dhabi Investment Authority (ADIA)
Sequoia Capital
Coatue
Dragoneer

IPO Highlights

Parameter	Details
Total IPO Size	₹6,632.00 crore
Fresh Issue	₹1,060.00 crore
Price Band	₹95.00 - ₹100.00 per share
Subscription Opens	November 4
Valuation (Upper Band)	₹61,736.00 crore

Allocation Structure

The IPO has been structured to cater to different categories of investors:

Investor Category	Allocation
Institutional Investors	75%
Non-Institutional Investors	15%
Retail Investors	10%

Retail Investor Participation

For retail investors looking to participate in Groww's IPO:

Minimum lot size: 150 shares
Minimum investment required: ₹15,000.00 (at upper price band)

The strong response to Groww's anchor book suggests significant investor interest in the fintech sector. As the online trading and investment landscape in India continues to evolve, Groww's IPO marks a notable event in the country's capital markets.

Investors and market watchers will be keenly observing the public subscription phase, which begins on November 4, to gauge the overall market sentiment and retail investor enthusiasm for this high-profile tech IPO.