Lendingkart Finance, the NBFC arm of Temasek-backed Lendingkart Group, has reported a pre-tax loss of ₹396 crore for FY25—a sharp reversal from its ₹60 crore profit a year earlier—amid shrinking revenues, rising loan loss provisions, and sector-wide pressure on fintech lending.
The firm’s net loss stood at ₹288.3 crore, triggering a breach of covenant on ₹75 crore worth of bonds it raised earlier this year.
What Went Wrong?
- Interest income fell ~20% to ₹812.3 crore
- Fee and commission income dropped 57.5% to ₹32.2 crore
- Loan loss provisions more than doubled to ₹523.5 crore
- Total expenses rose 18.5% to ₹1,263.5 crore
- Gross NPA rose to 4.33% (vs 2.9% in FY24)
- Loan book shrank by 35% to ₹1,382.3 crore
Covenant Breach: What It Means
In January 2024, Lendingkart Finance raised ₹75 crore via senior secured bonds at 11.25%, with a key covenant requiring pre-tax profitability during the bond’s tenure. With that now violated:
- Bondholders technically have the right to demand early repayment
- However, they are expected to waive the covenant breach
- Why? Coupon payments are current, and the bond has a corporate guarantee from Lendingkart Technologies Pvt Ltd
Sectoral Headwinds
The loss aligns with broader stress in fintech lending:
- Commercial credit disbursals fell 11% YoY in Q4 FY25 (SIDBI)
- Fintech personal loan disbursals dropped 15% QoQ in Q3 FY25—the steepest since the pandemic
- Loans in the ₹10–50 crore bracket saw the sharpest slowdown
Balance Sheet Pressures
- Tier-1 capital adequacy ratio fell to 22% in Sept 2024 (vs 34% in March)
- Decline due to RBI’s new norms requiring FLDGs to be deducted from tier-1 capital
- Lendingkart’s FLDG exposure stood at ₹172 crore
Backer Support & Future Capital Plans
Despite losses, Temasek’s subsidiary Fullerton Financial Holdings continues to back the group:
- Increased stake in Lendingkart Technologies from 37% to 44% via ₹77 crore buy-in (late 2024)
- Issued a ₹150 crore standby letter of credit
- Has invested ₹799 crore in Lendingkart since Oct 2019
Now in talks for a fresh ₹252 crore capital infusion from Fullerton, which could result in a majority stake acquisition, pending regulatory nod.
What’s Next for Lendingkart?
- Company will continue to restructure operations amid margin and provisioning pressures
- Redemption of trust among bondholders and investors hinges on covenant waivers and capital raise success
- Will look to stabilize asset quality, reduce costs, and diversify its unsecured SME lending book
