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Navi's FY24 operating profit falls 50% as loan write-offs surpass Rs 400 Cr

Entrackr · 2m

Navi Finserv, led by Flipkart co-founder Sachin Bansal, faced challenges scaling its revenue and profitability in the fiscal year ending March 2024. Despite a 6.6% decrease in scale, Navi’s operating profit declined by more than 50%, driven by a fall in collections and an increase in loan write-offs (bad debt). Navi’s revenue from operations decreased to Rs 1,906 crore in FY24 from Rs 2,041 crore in FY23, according to its consolidated annual report. It offers services such as personal and home loans, bill payments, insurance, digital gold, and mutual funds. Interest income made up 84.5% of the total revenue but saw a decline of 12.3%, reaching Rs 1,611 crore in the last fiscal year (FY24). Fees, commissions, gains on fair value, and other financial instruments brought Navi’s total income to Rs 1,909 crore in FY24, down from Rs 2,078 crore in FY23, reflecting an 8.1% year-on-year decrease. As with other lending companies, finance costs were the largest expenditure for Navi, accounting for 37.6% of total expenses. These costs also decreased by 4.8%, reaching Rs 658 crore in FY24. Additionally, Navi reduced employee benefits by 41.9%in FY24. Notably, the firm’s loan write-offs surged 3.2X to Rs 406 crore in FY24, up from Rs 125 crore in FY23. Fees, commissions, software, legal expenses, customer onboarding, and other costs pushed total expenditure to Rs 1,750 crore in FY24. Navi’s shrinking scale and major write-offs led to a 56% decline in operating profits, dropping to Rs 159 crore from Rs 335 crore in FY23. Despite this, the company posted a net profit of Rs 545 crore in FY24, largely due to Rs 429 crore gained from the sale of Svatantra Microfin, a former subsidiary. Svatantra Microfin was sold to Chaitanya India Fin Credit for a total consideration of Rs 1,166 crore in November 2023. FY23-FY24 FY23 FY24 EBITDA Margin 16.89% 9.80% Expense/₹ of Op Revenue ₹0.85 ₹0.92 ROCE 12.80% 5.39% According to Entrackr, Navi’s ROCE and EBITDA margins worsened to 5.39% and 12.80%, respectively. On a unit level, it spent Re 0.92 to earn a rupee in the fiscal year ending March 2024.