Navi turns profitable in FY21; revenue soars 3.9X to Rs 779 Cr

Navi Technologies, the financial services company started by Sachin Bansal and Ankit Aggarwal back in 2018 is slowly turning into a formidable player in the Indian startup ecosystem, with its range of financial products including loans, insurance, shares broking and asset management. 

Thus, even as many other startups and businesses suffered degrowth during FY21 due to the pandemic, Navi Technologies (formerly BAC Acquisitions) grew its revenues nearly four-fold to a little over Rs 779 crore in FY21, as compared to revenue of Rs 199 crore in FY20.

Interest income is the biggest contributor to its revenues, making up 58% of annual revenue during FY21. Such income grew over 3.1X to Rs 451 crore during FY21 as compared to Rs 143.02 in FY20.

Navi was lending aggressively throughout the fiscal affected by the pandemic and its loan book stood at Rs 1,673 crore as of 31 March 2021, swelling up by  77.5%  as compared to outstanding loans of  Rs 942.3 crore as of 31st March 2020.

The Bengaluru-based company's insurance business generated Rs 92.4 crore i.e 12% of its annual revenue during FY21. Operating income from other functions such as asset management, financial advisory and commissions jumped 5.8X to Rs 235.6 crore in FY21 from Rs 40.3 crore in FY20.

Impairment of financial assets including equity investments and loans was the single largest cost centre for Navi, making up nearly 28% of annual costs. These costs swelled up nearly 8X YoY to Rs 187.2 crore in FY21, including a loss of Rs 139.4 crore on bad loans.

The company increased its employee base to keep up with growth in operations during the last fiscal and its expenditure on employee benefits grew 2.8X to Rs 169.7 crore in FY21 from Rs 61.6 crore in FY20. Finance costs incurred by Navi also surged 2.4X YoY to Rs 88.2 crore in FY21.

During FY21, insurance expenses incurred by Navi Technologies grew massively to Rs 66.81 crore from only Rs 15.2 lakhs spent in FY20 as the firm got going in the segment. Advertisement and promotion expenses also blew up 38.7X YoY to Rs 38.7 crore during FY21 as spending on customer acquisition for its financial products started in earnest.

Overall, the company’s annual expenditure grew 3.1X to Rs 673.8 crore in FY21 as compared to Rs 219 crore spent in total during FY20. At a unit level, Navi spent Rs 0.86 to earn a single rupee of operating revenue during FY21, as compared to Rs 1.1 spent in FY20.

That means Navi went from red to black somewhere around the end of FY21, generating a profit of Rs 71.2 crore during that fiscal as compared to loss of Rs 8.07 crore during FY20.

Along with a 4x jump in scale, Navi has improved its EBITDA margin to 30.15% in FY21  from 22.02% in FY20. The financial services company’s asset turnover ratio has also improved by 507 BPS to 13.67% in FY21.

Navi has scaled up at a scorching pace and demonstrated strong performance in FY21. It’s turning out to be one of the leading financial service companies in the startup space. With the portfolio of lending, insurance and asset management, the company’s scale looks set to grow at a similar pace in the ongoing fiscal (FY22), even as it faces strong competition from other startups in each segment.

According to Entrackr’s sources, Navi is also getting into the stockbroking business and pushing hard for a banking licence. Bansal wants to change the banking and financial service experience to the existing and unbanked population. Unlike his last venture: Flipkart, which is yet to churn a profit, he is building Navi with emphasis on unit economics, as one would expect in the financial space, where even customers like the reassurance of a profitable entity to do business with.

Update: Navi is not backed by Gaja Capital. We have updated the earlier version of the story.