In a remarkable turnaround, Indian fintech startup Lendingkart has announced its achievement of profitability in the financial year 2022-23 (FY23). Founded in 2014 by Harshvardhan Lunia, Lendingkart operates as a Non-Banking Financial Company (NBFC) with a primary focus on disbursing loans to micro, small, and medium enterprises (MSMEs).
Financial Performance: A Shift from Losses to Profits
Lendingkart reported a consolidated net profit of INR 118.8 crore in FY23, a significant shift from the net loss of INR 203.4 crore in the previous fiscal year. This notable turnaround is attributed to a substantial reduction in spending on impairment loss on financial assets, loans, and advances.
The operating revenue of Lendingkart surged by 29.5% to INR 798.4 crore in FY23, up from INR 616.4 crore in FY22. The company’s interest income, however, decreased by over 25% YoY to INR 425.6 crore. On the other hand, income from other financial services, including platform fees, witnessed an extraordinary growth of more than 700% YoY, reaching INR 372.8 crore. When considering commission income from insurance and other non-operating sources, Lendingkart’s total revenue for FY23 reached INR 858 crore, compared to INR 643.1 crore in the previous year.
Strategic Moves and Acquisitions
In FY23, Lendingkart made strategic moves, including the pending acquisition of digital lending platform Upwards, awaiting regulatory approvals. This acquisition aligns with Lendingkart’s vision to strengthen its position in the digital lending landscape and diversify its portfolio.
Expense Management and Fiscal Discipline
Examining the company’s expenses, Lendingkart showcased fiscal discipline with a 15.5% decrease in total expenses, reaching INR 751.5 crore in FY23 from INR 889 crore in FY22. This reduction was primarily driven by a sharp decline in impairment loss on financial assets, loans, and advances, which decreased from INR 434.7 crore in FY22 to INR 112.1 crore in FY23.
While the finance cost increased by 4.5% to INR 249.7 crore, Lendingkart witnessed notable rises in employee benefit expenses, advertising, promotional expenses, and miscellaneous expenses. Employee benefit expenses surged by over 57% to INR 113.3 crore, emphasizing the company’s commitment to talent and human resources.
Future Expansion and Funding Initiatives
Earlier in the fiscal year, Lendingkart secured $24 million in long-term debt funding from EvolutionX Debt Capital, a growth-stage debt financing platform. This infusion of funds is earmarked to fuel the company’s expansion plans and provide crucial financing support to a broader spectrum of MSMEs across India.
Conclusion: A Resilient Journey
Lendingkart’s journey from losses to profits in FY23 showcases resilience and adaptability in a dynamic financial landscape. As the company continues to evolve, strategic acquisitions, prudent expense management, and a focus on diversified revenue streams position Lendingkart as a key player in India’s fintech ecosystem. The pending acquisition of Upwards and the infusion of funds underscore Lendingkart’s commitment to innovation, growth, and supporting the financial needs of MSMEs.
In a sector marked by challenges and opportunities, Lendingkart’s profitability milestone marks a significant chapter in its trajectory, reflecting the company’s ability to navigate complexities and emerge stronger in a competitive landscape.