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Auxilo’s profit jumps 2.5X in FY24; revenue grows double

Entrackr · 3m

Overseas education loans have picked up steam in India in the last few years, and the specialized companies in the space have been growing exponentially. Incred, LeapFinance and Leverage Edu reported significant uptick in their financing business focused on education. Earlier last year, HDFC had sold off its education loan business, HDFC Credila to a clutch of PEs at a hefty premium too, indicating the bullishness around the sector. The focus of the story today is education-focused non banking financial company Auxilo which posted a two-fold growth in its revenue to Rs 356.68 crore in FY24 from Rs 178 crore in FY23, its annual financial statements with the Registrar of Companies (RoC) shows. Auxilo has churned the majority of its collection through processing fees and interest received on the loan disbursements. This income accounted for 94.8% of the revenue which surged 94.5% to Rs 338.2 crore in the fiscal year ending March 2024 from Rs 173.81 crore in FY23. The company also made Rs 10.64 crore from non-operating sources which pushed its total income to Rs 367.32 crore in FY24. On the expense side, interest on borrowing formed 61.35% of the total expense. This expense mounted by 144.58% to Rs 168.49 crore in FY24 from Rs 68.89 crore in FY23. Meanwhile, its employee benefit cost grew 28.45% to Rs 41.76 crore in FY24 from Rs 32.51 crore in FY23. Other expenses including legal-professional, business sourcing, advertising increased by 17.91% to Rs 54.6 crore in FY24. Auxilo Finserve’s overall cost grew 2X to Rs 274.63 crore in FY24 from Rs 156 crore in FY23. Significantly, its profit also increased 2.5X to Rs 69.21 crore in FY24 from Rs 26 crore in FY23. Its ROEC and EBITDA stood at 8.57% and 79.91%, respectively. On a unit level, the company spent Re 0.77 to make a rupee of operating revenue in FY24. FY23-FY24 FY23 FY24 EBITDA Margin 70.48% 79.91% Expense/₹ of Op Revenue ₹0.88 ₹0.77 ROCE 6.68% 8.57% Considering that most education loans are not collateral backed, or unsecured, one has to wonder if the industry is not overheating. High growth rates for education loans, when seen in context of the headlines around the tightness in the jobs market, makes you wonder. Of course, lenders are betting on a cyclical turnaround by the time these loans fall due in a couple of years or earlier, besides the surging demand for overseas study in India. But froth is surely building up. Even loans given for study overseas, which form a significant chunk of these, are not the sure thing they used to be as immigration rules and conditions for work go through a churn in many of the destinations due to tight job markets. It does seem to be a classic case of venture and PE funding driving founders to stay the course, even when they would ordinarily have paused for considering a course correction. We will be watching out for the signs that speed breakers do exist on this seemingly smooth growth highway [overseas education loans].