BENGALURU — Billionbrains Garage Ventures, the parent company of India’s leading investment platform Groww, is actively developing its own proprietary, in-house artificial intelligence stack. The move is a strategic play to drive down soaring compute expenditures as the fintech giant deepens its integration of automated wealth management and trading tools.
The announcement, made by co-founder and Chief Executive Officer Lalit Keshre during the company’s Q2 FY27 earnings call, highlights the escalating financial pressures major technology platforms face as they race to operationalize generative AI at scale.
Main Facts
- In-House AI Stack: Groww is building a proprietary AI architecture to circumvent expensive third-party commercial large language models (LLMs) and reduce per-token operational costs.
- Financial Performance: For Q2 FY27, Groww posted flat operating revenue of ₹1,502 crore and a marginal 1% quarter-on-quarter dip in net profit, landing at ₹725 crore.
- Rising Operational Expenditures: Total cost to serve rose 24% sequentially to ₹206 crore, driven primarily by heavy AI workloads, increased trading days, and one-time client reimbursements. Conversely, growth-related costs fell 29% to ₹105 crore.
- Fisdom Integration Complete: Following regulatory clearance from the Securities and Exchange Board of India (SEBI), Groww successfully integrated wealthtech platform Fisdom into its core systems, pushing active customers up 5% quarter-on-quarter to 18.2 million.
- Margin Trading Facility (MTF) Surge: Groww’s MTF loan book climbed 15% sequentially to ₹4,351 crore—a staggering 2.6x expansion compared to the same period last year.
- UPI MDR Stance: Executive leadership vocalized strong opposition to a proposed ₹300 Merchant Discount Rate (MDR) cap on UPI transactions for capital markets, labeling it unsustainable for brokers.
Chronology of Events
May 2025 to October 2026: The Fisdom Acquisition and Consolidation
The roots of Groww’s current customer acquisition and wealth management expansion trace back to May 2025, when Billionbrains Garage Ventures inked a definitive agreement to acquire wealthtech platform Fisdom for $150 million.
Following intensive regulatory reviews, the acquisition secured formal approval from SEBI and was finalized in October 2025. Over the subsequent months, Groww’s engineering teams worked to migrate and merge Fisdom’s specialized wealth offerings onto Groww’s infrastructure.
During the July–September quarter (Q2 FY27), the integration was fully realized, enabling Groww to officially incorporate Fisdom’s user base into its active customer metrics and roll out unified wealth services across multiple interface layers.
Early 2026 to Q2 FY27: The AI Push and GR-1 Rollout
Concurrently, Groww accelerated its automation roadmap. Over the past several months, the company systematically introduced AI-powered features across its trading, bond, and wealth management verticals.
At the Groww Next 2026 event, the company debuted GR-1, an advanced AI investing assistant designed to analyze market dynamics, evaluate real-time news sentiment, and generate personalized portfolio insights. Rather than operating as an autonomous execution agent, GR-1 was deliberately built as an opt-in tool requiring explicit user authorization for any financial transaction.
As these AI capabilities expanded across the platform, token consumption scaled dramatically, forcing management to confront escalating cloud compute and infrastructure overheads.
Supporting Data and Financial Metrics
Groww’s Q2 FY27 earnings report paints a picture of a company aggressively pivoting toward technology-driven infrastructure while navigating shifting margin realities:
| Financial & Operational Metric | Q1 FY27 | Q2 FY27 | Quarter-on-Quarter Change |
|---|---|---|---|
| Operating Revenue | ₹1,502 crore (approx.) | ₹1,502 crore | Flat (0%) |
| Net Profit | ₹732 crore (approx.) | ₹725 crore | -1% |
| Cost to Serve | ₹166 crore | ₹206 crore | +24% |
| Cost to Grow | ₹148 crore (approx.) | ₹105 crore | -29% |
| Active Customers | 17.3 million | 18.2 million | +5% (Up 23% YoY) |
| Total Transacting Users | 22.9 million | 24.1 million | +5.2% |
| Executed Broking Orders | 560.2 million | 517.3 million | -8% |
| MTF Loan Book | ₹3,775 crore | ₹4,351 crore | +15% (Up 2.6x YoY) |
The contraction in overall executed orders—falling 8% from 560.2 million to 517.3 million—occurred despite an absolute increase in total transacting users, signaling shifts in trading frequency or market sentiment during the quarter. Meanwhile, the rapid expansion of the MTF loan book underscores a growing appetite among traders to leverage borrowed capital for equity investments under SEBI guidelines.
Official Responses and Leadership Insights
Tackling Infrastructure Inflation with Proprietary AI
Addressing analysts and stakeholders during the Q2 earnings call, CEO Lalit Keshre emphasized that building an in-house AI stack is no longer optional for high-volume consumer tech platforms.
“We are building our own in-house stack. So it will reduce our per token cost. If we had relied on third-party commercial models, our cost would have been much higher,” Keshre stated.
Elaborating on the cost structures, CFO Ishan Bansal dissected the divergence between the "cost to serve" and the "cost to grow."
“Cost to serve primarily has cost related to transactions and costs related to technology from our side. And whereas cost to grow is primarily, you can say, growth-related cost, where we spend some part of that in brand building, some part of that in performance marketing as well,” Bansal explained.
Bansal attributed the 24% spike in the cost to serve directly to AI infrastructure investments, elevated compute workloads during peak trading periods, and discrete one-time client payouts.
Capturing Market Share from Competitors
Discussing the strategic intent behind specialized product development—such as the "915" initiative tailored for high-volume Futures and Options (F&O) power traders—Bansal noted that the primary objective is market-share cannibalization rather than organic user upgrades.
“Our expectation is obviously to increase the market share in the power trader segment, and hence the focus was not on our customers graduating, but the focus was on customers from other platforms coming to us,” Bansal noted.
On the international front, Keshre addressed the phased rollout of the US-stock investing product, which entered beta testing last month. Eschewing a rigid calendar for a full public release, Keshre emphasized a deliberate, feedback-driven deployment model:
“As we have done with any product that has been launched so far, we go slow. We continue listening to the customers and keep making changes on what they are saying and continue launching… I don’t think we have a timeline like this.”
The UPI MDR Controversy
In a stark warning to financial regulators and payment aggregators, Groww’s leadership took a firm public stand against structural fee adjustments on digital rails. CFO Bansal explicitly condemned the consideration of a ₹300 Merchant Discount Rate (MDR) cap on UPI transactions for capital markets. He argued that such a cap is "not affordable" for digital brokers, given that retail investors routinely transfer funds into dedicated broker wallets without immediately executing trades, leaving platforms to absorb unrecoverable transaction switching costs.
Broader Implications
Groww’s strategic maneuvers in Q2 FY27 reflect the complex maturation phase of India’s digital brokerage sector. Several systemic implications emerge from the company’s latest disclosures:
- The Economics of Generative AI in Fintech: As consumer-facing platforms deploy complex advisory bots like GR-1, the reliance on external cloud and LLM providers introduces severe margin compression. By investing in proprietary, in-house stacks, Groww is charting a path toward margin recovery, setting a precedent that other domestic fintech unicorns will likely need to follow to remain competitive.
- Consolidation and Inorganic Growth: The smooth absorption of Fisdom demonstrates that scale in India’s wealthtech space will increasingly rely on strategic mergers and acquisitions rather than purely organic customer acquisition. Integrating diverse asset classes under a single ecosystem allows platforms to improve active user metrics despite temporary dips in transactional volume.
- Regulatory and Cost Pressures: With margins tightening—evidenced by the flat top-line revenue and dip in net profit—fintech operators face a delicate balancing act. Rising compliance costs, infrastructural outlays for AI workloads, and potential friction over payment gateway economics (such as the UPI MDR debate) threaten to test the profitability models of India’s retail investment boom.
