Nextbillion Technology (Groww), a venture capital-backed brokerage firm, has surpassed Zerodha Broking to become India's largest brokerage in terms of active clients. Groww had 6.63 million active clients at the end of September, roughly 150,000, or 2.3 percent, more than Zerodha, breaking the latter's long reign at the top.

According to NSE data, AngelOne and RKSV Securities (Upstox) were placed third and fourth, with 4.86 million and 2.19 million active clients, respectively. Zerodha had 6.32 million active investors at the end of August, while Groww had 5.99 million. For the second month in a row, a record number of IPOs and strong momentum in the secondary markets resulted in the addition of almost three million demat accounts in September. In the last two months, about 6.2 million demat accounts were added, bringing the total to 130 million - roughly 10% of the country's population.

However, as of the end of September, the NSE had just roughly 33.4 million active clients: those who traded at least once in the previous 12 months. Groww has a 19.9 percent market share of total active NSE clients, while Zerodha is close behind with a 19.4 percent market share.

Despite losing its top spot, Zerodha remains by far the most lucrative brokerage in the country. Zerodha made a net profit of Rs 2,907 crore on revenues of Rs 6,875 crore in FY23. If one ignores the pass-through exchange transaction charges, Zerodha's margins (profit before tax or PBT/revenue) are an astounding 70%.

According to news reports, Nextbillion Technology's top line increased thrice to Rs 1,294 crore in FY23. This contributed to the company's net profit of Rs 73 crore, up from a deficit of Rs 239 crore in FY22.

Most brokerages use aggressive techniques to bring in new clients. Many brokerages spent up to Rs 2,000 (per investor) to onboard new investors during the account opening frenzy of 2021-22. However, the move does not always produce results, as many clients open a trading account but never trade.

Zerodha, which pioneered the period of discount brokerage, often avoids such aggressive techniques, which helps to safeguard its bottom line.

"We are still the only broker in the country that charges an account starting fee... "Collecting an account opening fee right away helps set this expectation with a potential customer, filtering out users who may not be serious about trading or investing with us," the business stated in a blog post last month.

According to Groww's website, there are no opening or maintenance fees for brokerage, trading, or demat accounts. Zerodha, on the other hand, costs Rs 200 for opening an online account. It also charges extra fees for value-added services. The intra-day and F&O trading rates are substantially comparable for both top players, at Rs 20 per executed order.