NestAway in FY18: Revenue lesser than increase in expense & loss; Rs 294 Cr invested in mutual funds

The leading player in the co-living and rental space, NestAway’s financial performance in FY18 doesn’t sync with the position it commands.

The company that saw a 533 per cent growth in revenue in FY17, registered only 28.7 per cent increase in revenue in the current fiscal.

As per NestAway Technologies Pvt. Ltd.’s RoC filings with Ministry of Corporate Affairs, the revenue from operations in FY18 stood at Rs 46.98 crore. In FY17, this figure amounted to Rs 36.51 crore, implying an approximate Rs 10 crore increase.

At the same time, the expenses of the company took a 51.8 per cent jump to Rs 203.79 crore, from Rs 134.24 crore in the fiscal year ended March 2017. The highest expense of employee benefit itself took a 2.1X leap to Rs 93.49 crore.

The company spent Rs 4.3 to earn a rupee in FY18, while it was spending Rs 3.7 in FY17.

It is no surprise that the losses also took a 60.5 per cent hike to reach Rs 156.81 crore from Rs 97.73 crore.

If you look closely, the revenue earned by the company in FY18 is lesser than the amount by which expenses or the losses increased in the fiscal.

The poor financial growth was then topped by a 14-fold increase in mutual fund investment. Till March 2017, the company had invested in mutual funds worth Rs 21.36 crore, and in FY18 this increased to Rs 293.84 crore. The highest amount of Rs 154.32 crore was invested in IIFL Private Wealth.

Now, we can look forward to a hefty increase in the ‘Other Income’ entry of Profit and Loss statement in the next fiscal, given the company decides to sell these.

The practice of investing the funds available in mutual funds is not an uncommon practice in the ecosystem. Yet time and again, it goes on to prove the inefficiency of companies in relying on their own revenue for growth, instead of making money by investing in high-risk securities.

During the last calendar year the co-living segment saw a good inflow of funds, and as per a PropTiger report, is expected to grow up to $93 billion. NestAway, itself received Rs 64.5 crore from Goldman Sachs and Rs 50 lakhs Kalyan Krishnamurthy in 2018.

It might have gained popularity in the market and gained the top position, but if the financials do not reflect a synced growth with the popularity, the company will not be able to cash in on the growing industry properly.