LiquiLoans Growth Amid RBI Regulations

As the Reserve Bank of India (RBI) intensifies its regulations in the peer-to-peer (P2P) lending sector, the market leader, LiquiLoans, has showcased impressive growth of 3.4 times for the fiscal year ending March 2024. The financial records obtained from the Registrar of Companies (RoC) reveal that LiquiLoans’ revenue surged to Rs 695.63 crore in FY24, a substantial increase from Rs 203.43 crore in FY23.

Operational Highlights of LiquiLoans

LiquiLoans operates within the peer-to-peer lending framework, specialising in personal loans, consumer loans, and deposit financing. The platform prioritises a high level of diversification by limiting portfolio exposure to each borrower at just 0.5%. In the last fiscal year, these financial services constituted the company’s exclusive revenue source. The firm also generated an additional Rs 10 crore from interest income, bringing total revenue to Rs 706 crore in FY24.

Expense Analysis

When examining the expense side of the business, service fee expenses represented the largest portion, increasing fourfold to Rs 578.57 crore in FY24, compared to Rs 140 crore in FY23. Commission payouts climbed by 88% to Rs 64.72 crore, while expenses for employee benefits rose 2.5 times to Rs 40.80 crore. Overall, LiquiLoans’ total expenses escalated 3.3 times, reaching Rs 704.59 crore in FY24, up from Rs 212.94 crore in FY23.

Profitability and Financial Metrics

The significant surge in expenses resulted in an 88% decrease in LiquiLoans’ profits, which fell to Rs 71 lakh in FY24, down from Rs 5.70 crore in FY23. The company’s Return on Capital Employed (ROCE) and EBITDA margin were recorded at 1.11% and 0.35%, respectively. On a per unit basis, it cost LiquiLoans Rs 1.01 to generate every rupee of operating revenue during the past fiscal year.

Balance Sheet Overview

This Mumbai-based entity reported cash and bank balances amounting to Rs 33 lakh, alongside current assets valued at Rs 283 crore in FY24. Reports indicate that LiquiLoans has successfully raised $15 million so far, with Matrix Partners and CRED listed as lead investors.

Market Position and Future Prospects

LiquiLoans has earned a robust reputation in the lending industry, and market analyses suggest it maintains one of the lowest rates of non-performing loans within its portfolio. Serving as a backend support for numerous prominent players in the sector, the company has predominantly concentrated on borrowers with higher credit scores, effectively mitigating risks. This strategy implies that narrower margins are acceptable, provided returns are secure. As regulators aim to eliminate short-term market participants, LiquiLoans is well-positioned for sustained success in the vanilla personal loans sector, while also exploring future opportunities with additional products as it develops a strong database of high-quality borrowers.