Navi Records Q1 FY24 Revenue of Rs 439 Crores, Yet Profit Remains Under Pressure
In the first quarter of the fiscal year 2023-24 (Q1 FY24), Navi Finserv, led by Sachin Bansal, reported a consistent revenue of Rs 438.7 crore, which remained unchanged from its previous quarter (Q4 FY23). The company’s operating income was recorded at Rs 412 crore.
Navi Finserv’s revenue from operations displayed significant growth compared to the same quarter of the previous fiscal year (Q1 FY23). During Q1 FY23, the company’s revenue from operations amounted to Rs 184 crore. This substantial increase of 2.3 times (2.3X) in revenue indicates a remarkable expansion in the company’s financial performance over a year.
These financial figures shed light on Navi Finserv’s trajectory, showcasing both stability in its quarterly performance and substantial year-on-year growth in revenue.
During the first quarter of the fiscal year 2023-24 (Q1 FY24), interest income emerged as the primary driver of Navi Finserv’s revenue, constituting a significant 80% of the total earnings for the quarter. However, there was a decrease of 3.2% in this interest income figure during Q1 FY24, dropping to Rs 354.1 crore. This decline was observed compared to the preceding quarter, Q4 FY23, where the interest income stood at Rs 366.1 crore.
This reduction in interest income suggests a slight downturn in the company’s financial performance concerning this specific revenue stream during the given quarter. Despite this, it’s important to note that interest income remained a substantial part of Navi Finserv’s overall income composition during the reported period.
Apart from interest income, Navi Finserv derived the remainder of its income from various sources such as fees and commissions, net gains on fair value, and income from other operating activities. Notably, the income from these activities exhibited a substantial growth of 82% during the first quarter of the fiscal year 2023-24 (Q1 FY24), reaching a total of Rs 84.6 crore.
In contrast, the income generated from non-operating activities experienced a significant decline of 97%. This income dwindled from Rs 56.6 crore in the preceding quarter (Q4 FY23) to just Rs 1.56 crore in Q1 FY24.
This variance in income sources underscores the diverse nature of Navi Finserv’s revenue streams. While certain segments experienced significant growth, others faced notable declines. The combination of these factors contributed to the overall financial landscape of the company during the reported period.
Navi Finserv’s aggregate loan portfolio amounted to Rs 6,444 crore. Within this total, the secured portfolio constituted Rs 3,842 crore, indicating the portion of loans backed by collateral. Additionally, the company held cash and bank balances totalling Rs 1,285 crore, which could be used for various financial operations.
On the expenditure front, finance costs, which represent interest expenses, accounted for approximately 36.3% of the total expenses incurred by the company. In the first quarter of the fiscal year 2023-24 (Q1 FY24), these finance costs increased by 4.6%, rising from Rs 140.7 crore in the previous quarter (Q4 FY23) to Rs 147.2 crore.
This data provides insights into Navi Finserv’s financial structure, including the composition of its loan portfolio, cash reserves, and the impact of finance costs on its expenses. These figures collectively contribute to understanding the company’s financial position and cost dynamics during the reported period.
Navi Finserv recorded a non-cash expenditure of Rs 126 crore related to the impairment of its financial assets. Impairment refers to a decrease in an asset’s value; in this case, the company recognized a reduction in the value of certain financial assets it holds.
For the quarter ending in June 2023, Navi Finserv maintained an impairment provision amounting to Rs 471 crore against its loan assets. This provision reflects a set-aside amount to cover potential losses due to the reduced value or default of the loan assets.
Furthermore, the company incurred an additional Rs 31.6 crore in expenses related to employee benefits. This contributed to a 13.2% increase in overall costs, totalling Rs 405.2 crore during the first quarter of the fiscal year 2023-24 (Q1 FY24). This represents a rise from the expenses incurred in the previous quarter (Q4 FY23), which amounted to Rs 358 crore.
These financial entries demonstrate Navi Finserv’s recognition of impairment expenses, it’s provisioning for potential losses, and the impact of employee benefits on its overall costs. These factors contribute to the company’s comprehensive financial profile during the specified period.
Due to the costs associated with providing for impairments on financial assets and a reduction in other income, Navi Finserv reported a profit of Rs 26.2 crore in the first quarter of the fiscal year 2023-24 (Q1 FY24). This profit figure marks a decrease from the previous quarter, Q4 FY23 when the company had reported a profit of Rs 98.2 crore.
The combined impact of increased provision costs for impairment and reduced other income contributed to the decline in the company’s profitability during the reported quarter. These financial factors played a significant role in shaping Navi Finserv’s earnings performance over the specified period.
Navi Finserv submitted its draft red herring prospectus (DRHP) to the Securities and Exchange Board of India (SEBI) in March of the previous year. The purpose of this filing was to initiate the process of raising funds through an initial public offering (IPO), with the company aiming to raise Rs 3,350 crore from the market.
Despite receiving approval from SEBI for the IPO, Navi Finserv postponed its IPO plans. This delay was attributed to the prevailing market conditions, which the company determined needed to be more conducive to proceeding with the IPO. As a result, Navi Finserv opted to wait for more favourable market conditions before moving forward with its IPO after considering the broader economic and financial climate.
The recent months have brought about several significant developments for Navi Finserv. In July, the company announced its intention to raise funds by issuing secured and redeemable non-convertible debentures (NCDs) to raise Rs 500 crore through this financial instrument.
In a related move, Navi Finserv reduced its workforce by letting go of approximately 150-200 employees across various departments, including technology, product development, and analytics, among others. This strategic decision was likely aimed at optimizing operational efficiency and aligning the company’s workforce with its current objectives.
In a separate development, Svatantra Microfin Private Limited, a microfinance institution, agreed to acquire a subsidiary of the Navi Group, Chaitanya India Fin Credit Private Limited. This acquisition was valued at Rs 1,479 crore. Such transactions indicate companies’ broader strategies to streamline their operations, optimize their portfolio, and make strategic moves to enhance their business.
Together, these events highlight the dynamic nature of Navi Finserv’s operations and the range of strategic initiatives it’s undertaking to navigate the evolving market landscape.
