After the windfall in funding during the fiscal ended March 2020, six-year-old digital gold loan startup Rupeek has managed to scale its topline 4.7X to around Rs 32 crore with its loan book growing 6X to Rs 93.3 crore by the end of FY20 from Rs 15.5 crore at the start of the fiscal, regulatory filings show.
Rupeek also functions as a business correspondent for various banks and NBFCs such as ICICI Bank, Federal Bank, Karur Vysya Bank and provides services such as identification of borrowers, collection and preliminary processing of loan applications for its partners.
The Bengaluru-based company earned an operating revenue of Rs 26.7 crore in FY20 which surged 8.6X from Rs 3.12 crore earned in FY19.
Commission from its lending partners, which grew 10.3X to Rs 20.63 crore in FY20, made up 77.2% of these collections. The rest 22.8% were collected in the form of interest on gold loans which grew 5.5X to Rs 6.08 crore in FY20.
It earned another Rs 5.2 crore through bank deposits and mutual funds during FY20.
To achieve this sudden surge in its scale of operations, it had to spend a total of around Rs 109 crore during FY20, ballooning 5.2X as compared to Rs 20.8 crore spent in FY19. Rupeek spent Rs 4.08 to earn one rupee of operating revenue during the fiscal ended in March 2020.
Accounting for 49% of the total spends, employee benefits expense was the biggest cost centre for the Binny Bansal-backed startup, growing 4.4X to Rs 53.3 crore in FY20 from Rs 12 crore in FY19. To harness the growth of scale, Rupeek also hired outsourced employees spending an additional Rs 10.6 crore in FY20.
Further, recruitment expenses also shot up by 2.2X to Rs 2.2 crore in FY20 from Rs 98 lakh in FY19.
Advertising and marketing costs surged 10.3X to Rs 12.8 crore in FY20 as the company spent more on customer acquisition and awareness. Rent and storage costs grew 6.3x to Rs 4.8 crore, communication and consultancy costs jumped 2.8x to Rs 3 crore and legal plus professional expenses grew 6.7x to Rs 4.56 crore during FY20.
Miscellaneous expenses also ballooned 9.6X to Rs 3.86 crore pushing the net cash outflow from operations to Rs 280.4 crore in FY20 from the outflows of only Rs 59 crore in FY19. Rupeek had invested nearly Rs 11 crore to acquire IT assets during the fiscal ended in March 2020.
The company was cash-rich during the last fiscal and spent heavily in pursuit of scale and as a result, its losses also grew 5.4X to Rs 77.16 crore at an EBITDA margin of -323.7% in FY20.
In the ongoing fiscal, Rupeek has grown at a quick pace with a monthly disbursal of over Rs 300 crore. According to Entrackr’s sources, the company is likely to touch Rs 1,000 crore monthly loan disbursal mark by the second quarter of FY22. Importantly, the company has been witnessing enormous interest from top-tier investors.
Sources emphasised that Rupeek’s potential round is oversubscribed and investors including DST Global and Lee Fixel’s Addition are in talks to invest at a valuation of $600-700 million. Unlike many businesses which faced disruptions and hardships during the pandemic, Rupeek’s business has grown in the past six-eight months.
As gold prices have soared this year, coupled with an increase in the need to deal with financial stress due to the pandemic, gold loans have witnessed a surge, triggering a spurt in Rupeek’s scale.
With the company claiming to be profitable (after taxes) in 60% of 20 cities it operates in, the ongoing fiscal appears to be very positive for Rupeek. The company is likely to record a significant jump in topline without mind-boggling burn.
Besides traditional platforms including Muthoot Finance and Manappuram Finance, the company competes with India Gold in its space.