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CASHe’s Profit Drops 95% in FY24 Despite Revenue Growth

Personal loan and digital lending platform CASHe posted mixed results for FY24, showing steady revenue growth but a massive hit to its bottom line. The Mumbai-based firm reported a 95% decline in profits, largely attributed to skyrocketing customer acquisition costs during the fiscal year ending March 2024.

Revenue Growth Balanced by Declining Service Income

CASHe’s revenue from operations rose by 16.1% in FY24, reaching ₹650.9 crore compared to ₹560.6 crore in FY23. This growth was primarily fueled by a surge in other operating activities, which increased 4.4 times to ₹158.4 crore. The company also generated an additional ₹17.6 crore from interest income, bringing its total income to ₹668.54 crore for the year.

However, the sale of services, which accounted for 75.66% of operational revenue, saw a decline of 6.2%, dropping to ₹492.52 crore. This drop raised questions about the sustainability of CASHe’s core business model, even as other income streams compensated for the dip.

CASHe logo or digital lending in India

Mounting Expenses Weigh Heavily on Profits

CASHe’s expense sheet painted a challenging picture. Total expenses climbed 22.4% to ₹665.8 crore in FY24 from ₹544.1 crore the previous year. A significant portion of this increase came from:

  • Impairment loss on financial assets, which rose 26.9% to ₹256.84 crore, accounting for 38.58% of total costs.
  • Finance costs, up by 20.8% to ₹147.39 crore.
  • Customer acquisition costs, which surged 63.5% to ₹40.38 crore.

Other cost categories also saw substantial growth. Collection expenses jumped by 41.1%, while employee benefits climbed 29.5%. These factors, combined, significantly eroded the company’s profitability, leaving it with a net profit of just ₹1.44 crore, a sharp fall from ₹26.33 crore in FY23.

Profitability Metrics Take a Hit

CASHe’s profitability metrics reflected its struggles. The company’s return on capital employed (ROCE) stood at 40.21%, while its EBITDA margin was 23.21%. On a per-unit basis, CASHe spent ₹1.02 to generate a rupee of operating revenue during FY24, highlighting the rising cost pressures it faced.

The firm’s cash and bank balances showed a 92.3% jump to ₹95.22 crore, while current assets totaled ₹718 crore. While these figures provide some financial cushion, they are unlikely to offset the growing competitive and regulatory challenges CASHe faces.

Challenges Ahead in a Tough Market

The digital lending space is no stranger to competition, but CASHe is navigating particularly stormy waters. The company has secured approximately $38 million in funding to date, including $19 million raised from its Singapore-based holding company, TSLC Pte Ltd, in early 2022. However, with no major fundraising since then, its financial reserves may be running thin.

Looking ahead, CASHe’s challenges appear daunting:

  • Rising costs: Higher customer acquisition and financial expenses will continue to weigh on margins.
  • Competitive pressures: The digital lending market is flooded with players, each vying for the attention of India’s millennial and Gen Z borrowers.
  • Regulatory hurdles: Stricter oversight from the Reserve Bank of India (RBI) is creating additional compliance costs for lenders.

These factors suggest that CASHe will need to innovate and optimize its operations to stay afloat in FY25.

Key Financial Metrics FY24 Value (₹ crore)
Revenue from Operations 650.9
Impairment Loss 256.84
Finance Costs 147.39
Customer Acquisition Costs 40.38
Net Profit 1.44

The Road Ahead for CASHe

CASHe’s future hinges on its ability to adapt to market realities. The company’s reliance on millennial and Gen Z customers may be its strength, but it also demands continued investment in technology and marketing. As equity capital dries up and lending costs rise, CASHe must find innovative ways to maintain its market share and grow sustainably.

The challenges of FY24 highlight the need for a strategic overhaul. If CASHe can balance cost control with revenue diversification, it may yet turn its fortunes around.

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