How Groww, Angel One and bank brokers make money beyond brokerage

Most investors think stock brokers make money mainly from brokerage charges. But the business models of India's major brokers show that trading fees are only one part of the picture.

A review of the FY26 annual reports of major brokers including Groww, Angel One, ICICI Securities, HDFC Securities, Kotak Securities and Motilal Oswal shows that lending, interest income, distribution and advertising costs can have a major impact on how these companies make and spend money.

Brokerage is only part of the business

Groww's annual report reported ₹3,773 crore under fees and commission for FY26, but the company does not separately break this figure into brokerage and other components in its annual report. Its quarterly shareholder disclosures, however, show that trading accounted for around 76% of its income mix when the four quarters were weighted by total income.

Equity derivatives made up the largest part at around 55%, followed by stocks at around 18% and commodity derivatives at around 2%. This means trading activity remains an important source of revenue even for a platform widely associated with mutual fund investments.

Other brokers have a different mix. HDFC Securities and ICICI Securities earn significant income from lending and interest, while SBI Securities gets a large part of its income from selling financial products, including loans offered through its parent bank.

Lending is a major revenue source

One important business for brokers is Margin Trading Funding, or MTF. Under this model, investors can borrow money from the broker to buy securities by providing shares as security.

The broker earns interest on this funding. According to the analysis of broker annual reports, MTF rates can be around 15% at some firms, making the spread between borrowing costs and lending rates important for profitability.

Bank owned brokers have an advantage because they can access funds at lower rates. HDFC Securities borrowed at rates as low as 6.15%, while Kotak Securities reported borrowing costs as low as 5.98%. Groww's disclosed borrowing costs were between 10.35% and 13.20%.

This difference can give bank backed brokers a wider lending spread.

Advertising costs differ sharply

The other major difference is customer acquisition.

Angel One spent around ₹819 crore on advertising and promotion in FY26, while Groww spent around ₹487 crore. The analysis said Angel One's advertising spend worked out to roughly ₹1,212 per active customer compared with around ₹376 for Groww.

Angel One also spent around ₹150 crore on its IPL sponsorship, according to comments from its CFO.

Groww's customer acquisition cost rose during FY26, reaching around ₹1,000 in the second half after being lower earlier in the year. At the same time, the number of active traders across the NSE fell around 7% to 4.57 crore.

This means brokers are competing for customers in a market where the overall active trader base has declined.

Bank brokers have a different advantage

Bank owned brokers such as HDFC Securities, ICICI Securities, Kotak Securities and SBI Securities can use their parent banks' existing customer networks.

A customer who already has a bank account, salary account or loan relationship can be offered broking services through the same ecosystem. This reduces the need to spend heavily on advertising to acquire every customer.

The analysis compares this with the difference between paying for advertising every year and building a loan book that continues generating interest income.

What the numbers show

The analysis found that bank owned brokers generally reported profit margins between 25% and 30%, while discount brokers showed a much wider range.

Groww was estimated to have a profit margin of around 43% compared with around 18% for Angel One. The difference reflects variations in customer acquisition costs, partner payouts, lending income and other expenses.

The broader takeaway is that India's broking industry is no longer simply about charging customers for trades. Lending, distribution, customer acquisition and funding costs can be just as important in determining how profitable a broker becomes.

How does Groww make money?

Groww makes money mainly through fees and commissions, with trading activity forming a large part of its disclosed income mix. It also earns from other financial services.

Is Groww a good stock broker for trading?

Groww is one of India's major digital brokers, but whether Groww is good for trading depends on brokerage, platform features, products and the type of trading an investor does.

Is Groww more dependent on trading than Angel One?

Groww's disclosed product mix shows a high dependence on trading income, while Angel One also earns from broking, lending and other financial services.

How does Angel One make money?

Angel One earns from broking and financial services, while expanding into lending, wealth management, mutual funds, insurance and other products.

Is Angel One a good stock broker?

Angel One is a large Indian retail broker with a broad financial services platform, but investors should compare its charges, products and services with Groww, Zerodha and other brokers.

Why does Angel One spend so much on advertising?

Angel One uses advertising and brand spending to acquire and retain customers as it competes for a larger share of India's retail investing market.

Is Groww better than Angel One for investors?

Groww and Angel One have different business models and product offerings, so the better platform depends on factors such as trading needs, investment products, charges and user experience.

How does ICICI Securities make money?

ICICI Securities earns from broking and financial services, while interest income and lending related activities are also important parts of its business.

Is ICICI Securities a good broker for long term investors?

ICICI Securities can be suitable for investors who value a bank backed financial ecosystem, but charges, products and services should be compared with Groww, Angel One and other brokers.

Why can bank owned brokers like ICICI Securities borrow money more cheaply?

Bank owned brokers such as ICICI Securities can benefit from access to funding and the financial strength of their parent banking groups, which can reduce borrowing costs.

Is HDFC Securities a good broker compared with Groww?

HDFC Securities has the advantage of being part of the HDFC financial ecosystem, while Groww operates as a digital first platform. The better choice depends on the investor's requirements.

How does HDFC Securities make money?

HDFC Securities earns from broking and financial services, while interest and lending related income can also contribute significantly to its business.

Why are bank brokers like HDFC Securities different from Groww?

HDFC Securities can use the wider HDFC Bank customer ecosystem and access funding through a bank backed structure, while Groww relies more heavily on its standalone digital platform.

Does Groww make money from F&O trading?

Yes. Groww's disclosed product mix shows that equity derivatives account for a large share of its trading related income.

Is Groww dependent on options trading?

Groww has significant exposure to equity derivatives, making derivatives activity an important part of its revenue mix.

How do stock brokers make money if brokerage is zero?

Brokers can earn from trading fees, interest on margin funding, lending, distribution commissions and other financial services even when delivery brokerage is zero.

Do Groww and Angel One earn money from MTF?

Yes. Margin Trading Funding is an important financial service through which brokers can earn interest from customers who borrow money to buy securities.

What is MTF in Groww and Angel One?

MTF, or Margin Trading Funding, allows eligible customers to borrow money from a broker to purchase securities by providing the required margin.

Why is lending important for ICICI Securities and HDFC Securities?

Lending can generate interest income for ICICI Securities and HDFC Securities, making funding costs and lending spreads important to their profitability.

Do bank brokers have an advantage over Groww and Angel One?

Bank backed brokers can have an advantage in funding costs and customer distribution because they are connected to larger financial institutions.

Why does Groww spend less on advertising than Angel One?

Groww has built a large digital customer base without relying on advertising spending at the same level as Angel One, although customer acquisition costs remain an important expense.

What is customer acquisition cost for Groww?

Customer acquisition cost, or CAC, measures how much Groww spends to acquire a new customer. The company's disclosures show that CAC increased during FY26 before easing later in the year.

Why is customer acquisition cost important for Angel One and Groww?

CAC shows how much Groww and Angel One spend to acquire customers and helps investors understand whether growth is becoming more expensive.

Is Angel One's advertising spending good for its business?

Advertising can help Angel One acquire customers and build its brand, but high spending can also reduce profitability if customer growth does not keep pace with the cost.

Which is the best broker between Groww, Angel One and ICICI Securities?

There is no single best broker for everyone. Groww, Angel One and ICICI Securities have different pricing, products, financial ecosystems and business models.

Is Groww the best discount broker in India?

Groww is among India's largest digital brokers, but whether it is the best depends on the investor's trading requirements, charges and preferred financial products.

Is Angel One the best broker for active traders?

Angel One is a major retail broker with a large trading platform, but active traders should compare its charges, trading tools and services with other brokers.

Is ICICI Securities good for investors who already use ICICI Bank?

ICICI Securities can be convenient for customers who already use ICICI Bank because of the wider financial ecosystem and integration between services.

Why do brokers charge interest on margin funding?

Brokers charge interest on margin funding because they provide capital that customers use to buy securities beyond their available funds.

How much do brokers earn from margin funding?

The amount depends on the broker, interest rate, loan book and customer usage. Higher lending spreads can increase the contribution of margin funding to broker profits.

Do stock brokers make more money from brokerage or lending?

It depends on the broker. Groww and Angel One have significant trading related income, while bank backed brokers such as ICICI Securities and HDFC Securities have greater exposure to interest and lending income.

Why is brokerage not the main income source for some brokers?

Modern brokers have expanded beyond trading into lending, distribution, wealth management, insurance and other financial services, reducing their dependence on brokerage alone.

How does SBI Securities make money?

SBI Securities earns from broking and financial product distribution, while its connection with State Bank of India gives it access to a large existing customer ecosystem.

Is SBI Securities better than Groww?

SBI Securities and Groww target customers through different models. SBI Securities benefits from the SBI ecosystem, while Groww has built a digital first investing platform.

How does Kotak Securities make money?

Kotak Securities earns from broking and financial services, with interest and lending related income also forming part of its business model.

Is Kotak Securities better than ICICI Securities?

Kotak Securities and ICICI Securities are both bank backed brokers, but their charges, products and platforms differ. Investors should compare the services they actually need.

Why do bank brokers spend less on advertising than Angel One?

Bank backed brokers can cross sell broking services to existing banking customers, reducing the need to acquire every customer through separate advertising campaigns.

What is the biggest cost for Groww and Angel One?

Customer acquisition, technology, employee costs and other operating expenses are important costs for Groww and Angel One, while the exact cost structure differs between the companies.

Are Groww and Angel One profitable businesses?

Yes. Both Groww and Angel One operate profitable businesses, although their profit margins and revenue mix differ because of their different business models.

Is Groww more profitable than Angel One?

Groww and Angel One have different revenue and cost structures, so comparing profit margins alone does not fully explain their business performance.

Can Groww become a stronger lending business?

Groww has been expanding its lending related activities, but its future contribution will depend on funding costs, customer demand, credit quality and the scale of its lending book.

What is the main advantage of Groww over Angel One?

Groww's digital platform and customer acquisition model are major parts of its competitive position, while Angel One has a broader financial services strategy and a large retail customer base.

What is the main advantage of ICICI Securities over Groww?

ICICI Securities benefits from its bank backed financial ecosystem, which can support customer distribution and funding, while Groww has built its business around a digital first model.

Is the Indian stock broking business becoming more competitive?

Yes. Groww, Angel One, ICICI Securities, HDFC Securities and other brokers are competing for customers while the active trader base and trading activity can change with market conditions.

How do stock brokers make money from customers besides trading?

Stock brokers can earn from margin funding, lending, mutual fund and insurance distribution, wealth products and other financial services in addition to trading related income.

Are Groww and Angel One dependent on advertising to grow?

Both companies use customer acquisition and marketing strategies, but Groww and Angel One have different spending levels and approaches to acquiring customers.

Which is the best business model, Groww, Angel One or ICICI Securities?

Groww focuses heavily on digital customer acquisition and trading, Angel One combines broking with a wider financial services platform, while ICICI Securities benefits from a bank backed model. Each has different strengths and risks.