Lendingkart, the prominent fintech startup specializing in loans for micro, small, and medium enterprises (MSMEs), has marked a significant milestone by turning profitable in the financial year 2022-23 (FY23). The company reported a consolidated net profit of INR 118.8 Crore, a notable turnaround from the INR 203.4 Crore net loss in the prior fiscal year. This achievement was attributed to a substantial reduction in spending, particularly in impairment loss on financial assets, loans, and advances.
In addition to the impressive profitability, Lendingkart witnessed a robust 29.5% increase in operating revenue, reaching INR 798.4 Crore in FY23, up from INR 616.4 Crore in FY22. Founded in 2014 by Harshvardhan Lunia, Lendingkart holds an NBFC license and serves as a crucial financial partner for MSMEs.
Revenue Streams and Growth Drivers:
Lendingkart’s revenue composition saw a shift, with interest income experiencing a YoY decline of over 25% to INR 425.6 Crore. However, income from other financial services, including platform fees, saw an extraordinary YoY surge of more than 700%, reaching INR 372.8 Crore. The inclusion of commission income from insurance and other non-operating sources brought Lendingkart’s total revenue to INR 858 Crore in FY23, compared to INR 643.1 Crore in the previous fiscal year.
Navigating Expenses and Strategic Decisions:
While non-operating expenses increased, Lendingkart achieved an overall 15.5% reduction in total expenses, amounting to INR 751.5 Crore in FY23, down from INR 889 Crore in the prior year. A significant contributor to this decline was the noteworthy reduction in spending on the impairment loss of financial instruments.
Breaking Down the Expenses:
- Cost of Impairment: The startup’s impairment loss on financial assets, loans, and advances decreased to INR 112.1 Crore in FY23, a substantial drop from the INR 434.7 Crore spent in the previous fiscal year.
- Finance Cost: While Lendingkart’s finance cost increased by 4.5% to INR 249.7 Crore in FY23, it included various components such as interest expenses on debt securities and non-current loans from banks.
- Employee Cost: Employee benefit expenses rose over 57% to INR 113.3 Crore, with a significant portion allocated to salaries and wages.
- Advertising and Promotional Expenses: The startup invested INR 27.6 Crore in advertising, notably higher than the INR 13.2 Crore spent in FY22, as part of its campaigns featuring actor Rajkummar Rao.
- Miscellaneous Expenses: Lendingkart’s miscellaneous expenses doubled YoY to INR 55.7 Crore, covering various operational aspects such as corporate guarantee fees, branding fees, software expenses, marketing, and sales promotion expenses.
In the midst of this financial success, Lendingkart, earlier this year, secured $24 million in long-term debt funding from EvolutionX Debt Capital to further fuel growth and extend financing support to more MSMEs across India.
