Groww pays $160 million tax for domicile shift; losses rise

Stock broking platform Groww paid Rs 1,340 crore ($160 million) in taxes, as it flipped its parent entity from the US to India in May this year. The tax payout resulted in Groww clocking a net loss of Rs 805 crore for the financial year ending March 31, 2024. At an operational level the fintech reported a profit of Rs 535 crore up from Rs 458 crore in FY23.

The Bengaluru-based startup joins Walmart-owned PhonePe which flipped to India from Singapore in October 2022 and paid a billion dollars in taxes to the Indian government

Unlike PhonePe which executed a share swap deal between its Indian and Singapore units, Groww merged its US parent with its Indian entity, thereby paying taxes in the US. The Peak XV Partners-backed startup was last valued at $3 billion in 2021. The company has not raised any major institutional equity round since then.

Payments majors Razorpay and Pine Labs are in the queue to ‘reverse-flip’ to India along with quick commerce major Zepto.

ET reported in May that Razorpay is estimated to incur a tax outgo of $200 million once its restructuring to relocate from the US to India is complete.

A key reason for fintech firms to relocate their domicile is to align with India’s regulatory framework, as local financial regulators prefer companies and their subsidiaries to be based within the country. Additionally, the prospect of an initial public offering plays a crucial role in this move.

At a consolidated level, Groww reported revenues of Rs 3,145 crore for the year ended March 31, 2024, marking a 119% increase from Rs 1,435 crore in the previous fiscal year.

Revenue from Groww's core broking business more than doubled in FY24 to Rs 2,899 crore from Rs 1,294 crore in FY23, as previously reported by ET.

Founded in 2016 as a mutual fund investment platform, Groww expanded into stock trading in 2020. Last year, it further diversified into consumer lending, payments and asset management through subsidiaries.

On September 26, ET reported that discount brokers like Groww were increasingly entering the business of providing margin-trading facilities, seeking to diversify their revenue channels, especially with regulatory scrutiny impacting the core revenue-generating business of futures and options trading.

Groww’s main competitor, Zerodha, recorded a net profit of Rs 4,700 crore on revenues of Rs 8,320 crore for FY24, according to chief executive Nithin Kamath.

In September 2023, Groww overtook Zerodha as the largest broking platform in India with 6.63 million active investors compared to the rival’s 6.48 million. By May 2024, Groww’s active client base surpassed 10 million, making it the first discount broker in India to reach this milestone.