Strategic Shift to Lending Fuels Growth
True Balance’s strategic pivot to lending has been a game-changer for the company. Since obtaining its own Non-Banking Financial Company (NBFC) license in FY21, the company has focused on providing personal loans to borrowers who are often overlooked by traditional banks. This shift has enabled True Balance to tap into a large and underserved market, driving significant revenue growth. The company’s operating revenue from service and processing charges on loans surged by 63.2% to ₹377 crore in FY24.
The company’s innovative approach to lending, which includes leveraging technology to assess creditworthiness and streamline the loan approval process, has been instrumental in its success. True Balance’s ability to offer quick and convenient loans has resonated with customers, leading to a substantial increase in loan disbursements. The company’s income from interest on loans also contributed significantly to its overall revenue, amounting to ₹280 crore in FY24.
Despite the challenges posed by non-performing assets (NPAs), True Balance has managed to maintain a healthy profit margin. The company’s focus on risk management and prudent lending practices has helped mitigate the impact of bad debts. In FY24, True Balance wrote off bad debts worth over ₹114 crore, while provisions for NPAs accounted for 36.2% of its overall costs. This disciplined approach has enabled the company to achieve a 2.3x increase in net profit.
Financial Performance and Key Metrics
True Balance’s financial performance in FY24 has been impressive, with several key metrics showing significant improvement. The company’s Return on Capital Employed (ROCE) increased to 42.24%, up from 32.11% in the previous fiscal year. This indicates that True Balance is effectively utilizing its capital to generate returns. Additionally, the company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin improved to 27.64%, reflecting its strong operational efficiency.
The company’s overall expenses also saw a notable increase, rising by 51.4% to ₹557 crore in FY24. This increase was driven by higher spending on employee benefits, finance, advertising, information technology, and other overheads. Despite the rise in expenses, True Balance’s cost management strategies have ensured that the company remains profitable. On a unit level, the company spent ₹0.84 to earn a rupee in FY24, demonstrating its operational efficiency.
True Balance’s ability to raise substantial funding has also played a crucial role in its growth. The company has raised $140 million across equity and debt rounds, including a $28 million investment led by SoftBank and Daesung Private Equity. This financial backing has provided True Balance with the resources needed to scale its operations and invest in technology and innovation.
Future Outlook and Expansion Plans
Looking ahead, True Balance is well-positioned to continue its growth trajectory. The company plans to expand its product offerings and explore new markets to drive further growth. True Balance’s focus on innovation and customer-centric solutions will be key to its success in the highly competitive fintech landscape. The company is also exploring opportunities to enhance its digital lending platform and introduce new financial products to cater to a broader audience.
True Balance’s commitment to financial inclusion and its ability to adapt to changing market dynamics have been critical to its success. The company’s innovative approach to lending and its focus on underserved segments of the market have set it apart from competitors. As True Balance continues to grow, it remains committed to providing accessible and affordable financial solutions to its customers.
The fintech industry in India is poised for significant growth, with increasing adoption of digital financial services. True Balance’s success story is a testament to the potential of fintech startups to drive financial inclusion and transform the financial services landscape. With its strong financial performance and strategic vision, True Balance is well-positioned to capitalize on the opportunities in the market and continue its journey of growth and innovation.
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