Groww’s customer acquisition cost spikes 73% in H1 FY26

Groww reported a profitable yet uneven second quarter of FY26, posting higher earnings even as pressure mounted across revenue, user activity, customer acquisition costs, and cash reserves, according to its Q2 FY26 shareholders’ letter shared with the exchanges.

The company recorded Rs 1,071 crore in total income for the quarter, with profit after tax of Rs 471 crore, a 12% year-on-year increase on paper. However, the growth isn’t as strong as it appears. In the year-ago period, Groww had booked a one-time long-term incentive provision of Rs 159.3 crore, which was reversed later. 

Adjusting for that reversal, the company’s PAT would have actually declined 12–13% YoY, matching the drop in operating revenue. Revenue from operations slipped 9% YoY to Rs 1,019 crore, largely due to reduced derivatives activity following SEBI’s true-to-label circular.

User momentum remains under strain as well. Groww’s NSE active clients fell to 11.9 million, down from 13.2 million earlier this year. The trend reflects a broader industry correction, with the overall NSE active base declining from 50.2 million in January 2025 to 45.3 million by the end of Q2. Groww said the metric is a lagging indicator and highlighted early signs of a rebound in October, where its market share edged up to 26.6%, compared to 25.6% last year. Total transacting users grew 5% sequentially to 19 million, while total customer assets inched up 2% to Rs 2.7 trillion.

The quarter also absorbed the financial impact of Groww’s acquisition of Fisdom, completed in October. The company paid Rs 961 crore for the deal, which reflects in its balance sheet. Fisdom, which generated Rs 166 crore in revenue last year, will begin contributing to Groww’s revenue from the upcoming quarter, adding an estimated 3–4% to operating income.

On the cost front, the company’s cost to grow rose 23% YoY and 15% QoQ to Rs 125 crore, steered primarily by a 48% jump in performance marketing spends. While branding expenses fell, overall customer acquisition costs spiked sharply. Groww’s CAC for H1 FY26 climbed to Rs 1,374, significantly higher than Rs 796 in the same period last year.

Despite reporting strong profits, Groww’s cash balance fell 6%, declining from Rs 3,819 crore to Rs 3,599 crore. The company attributed the fall to increased deployment into its MTF and LAS books, debt repayments, and the cash outflow related to the Fisdom acquisition. 

Groww also expanded its product suite further. Commodity derivatives, launched in phases in September, saw early engagement with 7,000–8,000 daily transacting users, although their contribution to revenue is still below 1%. The company also rolled out 915, a desktop-first terminal for advanced traders, and continued scaling its presence in fixed-income products, capturing 5–6% retail market share in Bond IPOs.

Overall, Groww’s second quarter was defined by a paradoxical mix of rising profitability and weakening operating momentum. Revenue declined, user activity softened, customer acquisition became more expensive, and cash reserves shrank. With Fisdom’s consolidation kicking in next quarter and high-yield lending and trading products expanding, the coming months will test whether Groww can hold on to its high-margin profile amid a cooling retail investment cycle.