Indifi Technologies: Impactful Growth in MSME Lending Sector

Indifi Technologies has achieved a remarkable milestone with over 60% year-on-year growth in its financial performance for the fiscal year ending March 2024. This growth follows an outstanding fiscal year 2023, during which the company doubled its operations and successfully attained profitability.

In FY24, Indifi’s revenue from operations soared to Rs 317 crore, a significant increase from Rs 198 crore in FY23, as detailed in its consolidated annual results filed with the Registrar of Companies (RoC).

Services and Market Reach of Indifi

Indifi provides loans specifically designed for small enterprises in various sectors including travel, hotels, e-commerce, restaurants, trading, and retail, which typically face difficulties in securing credit from traditional financial institutions. The company has issued over 100,000 loans, partnered with over 80 active lenders, and successfully caters to businesses across more than 400 cities, according to information available on its official website.

Revenue Streams

The bulk of Indifi’s revenue is generated through processing fees charged to borrowers at the time of loan disbursement as well as service fees collected from lenders for comprehensive services such as loan origination, servicing, and collection. Additionally, Indifi earned Rs 24 crore from interest and other minor income sources, bringing its total revenue to Rs 341 crore in FY24, up from Rs 213 crore in the previous fiscal year.

Cost Management and Financial Challenges

Indifi has engaged in co-lending agreements with banks and non-banking financial companies (NBFCs), leading to interest costs becoming the largest segment of its expenditures. This cost experienced a notable increase of 62.1%, rising to Rs 107 crore in FY24 from Rs 66 crore in FY23, which represents 32% of the company’s overall expenses. Employee benefit costs also rose by 28.6% year-on-year to Rs 72 crore during the last fiscal year.

Impact of Rising Costs on Profitability

With the expansion of operations, Indifi’s cost related to bad debt write-offs spiked 2.1 times to Rs 45 crore in FY24. Furthermore, escalating costs in advertising, legal, IT, and other overheads resulted in total expenditures climbing by 65% to Rs 335 crore in FY24, compared to Rs 203 crore in FY23. The surge in bad debt expenses alongside higher employee benefits has surpassed revenue growth, causing Indifi’s profit to decrease to Rs 2.7 crore in FY24, down from Rs 5.1 crore in FY23. This indicates that for every rupee earned, the company expended approximately Rs 1.06.

Financial Position and Investment Round

As of the end of FY24, Indifi’s total current assets amounted to Rs 1,169 crore, which includes Rs 232 crore in cash and bank balances. The company has raised over $80 million to date, including $35 million in its Series E funding round, led by ICICI Venture with contributions from existing investors. According to various sources on startup data intelligence, the CDC Group is reported to be the largest external investor, followed by Accel and Omidyar Network.