In a significant turnaround, Navi Finserv, a subsidiary of Navi Technologies led by Flipkart co-founder Sachin Bansal, has announced a net profit of INR 172 crore in the financial year 2022-23 (FY23), marking a stark contrast to the INR 67 crore loss incurred in the previous fiscal.
Strong Financial Performance Across the Board
Navi Finserv showcased robust financial growth across multiple fronts, with operating revenue skyrocketing by 2.8 times to reach INR 1,283 crore in FY23, compared to the INR 457.1 crore recorded in FY22. The startup’s quarterly results for June 2023 indicated a net profit increase from INR 22.9 crore to INR 26.2 crore year-on-year, although a sequential decline was observed from INR 98.2 crore in the previous quarter.
Diverse Loan Products Drive Revenue Surge
Navi Finserv, a key subsidiary of the upcoming IPO-bound Navi Technologies, focuses primarily on loan products including personal, vehicle, and home loans. The subsidiary, which holds an NBFC license, underwent conversion to a public company in March the previous year.
Strategic Fundraising Initiatives and Expansion Plans
In a bid to bolster its financial capabilities, Navi Finserv’s board approved plans to raise funds through non-convertible debentures (NCDs) and commercial papers (CPs). The company sought to raise INR 500 crore through a public issue of NCDs, with subscription open from July 10 to July 21. This move aligns with Navi Finserv’s growth strategy, positioning it for future expansion.
Expenditure Trends and Employee Benefits
While achieving impressive financial gains, Navi Finserv witnessed an increase in total expenses, growing 2.1 times year-on-year to INR 1,179.1 crore in FY23. Finance costs, including interest expenses, emerged as a significant portion of the expenses, surging over 5 times to INR 426.6 crore from INR 80.9 crore in the previous fiscal year. Additionally, employee benefit expenses rose, reaching INR 84.5 crore in FY23 compared to INR 49.7 crore in the prior year.
Market Impact and Upcoming IPO
Navi Technologies, Navi Finserv’s parent company, experienced challenges in FY22, reporting a loss of INR 362 crore due to lackluster performance by Navi Finserv and its insurance arm, Navi General Insurance. Despite this setback, Navi Technologies secured approval from the Securities and Exchange Board of India (SEBI) for its INR 3,350 crore IPO in September of the previous year, though the public offering is yet to be launched.
Industry Trends and Acquisition News
Reflecting wider industry trends, Navi Technologies joined the ranks of Indian startups forced to downsize, with reports indicating the layoff of around 200 employees last month. This move comes amid funding challenges and market volatility, impacting more than 110 Indian startups since 2022. Additionally, Ananya Birla-led Svatantra Microfin Pvt Ltd recently announced plans to acquire Navi’s subsidiary, Chaitanya India Fin Credit Pvt Ltd, for INR 1,479 crore.
In conclusion, Navi Finserv’s impressive financial recovery, strategic fundraising initiatives, and adaptation to market dynamics underline the fintech’s resilience and determination to navigate the evolving landscape of the financial sector.
