Decoding Sachin Bansal’s Navi Technologies

Sachin Bansal is a name that is well-known in the start-up world and will soon be a known name in the stock markets as well. The former chairman and co-founder of Flipkart has filed the draft red herring prospectus (DRHP) for taking his company Navi Technologies public. 

Bansal co-founded Navi with Ankit Agarwal, a former banker who has held senior positions across Deutsche Bank and Bank of America. 

What does Navi Technologies do? 

In the company’s own words, it offers a comprehensive suite of financial services solutions under the Navi brand including personal loans, home loans, general insurance and mutual funds in a digital-first manner. 

The personal loan business was launched in April 2020 and it extends instant personal loans of up to Rs 20 lakh with tenors of up to 84 months through an entirely digital Navi App-only process. 

Since its launch and up to December 31, 2021, the company disbursed 4.81 lakh personal loans totalling Rs 2,246.31 crore. As of December 31, 2021, its personal loans business had an AUM of Rs 1,418.7 crore. 

The home loan business was launched in February 2021 and as of December 31, 2021, the company had disbursed 604 home loans across eight cities in India with an average ticket size of Rs 38.6 lakh. The AUM of the home loan business was pegged at Rs 177.71 crore as on December 31, 2021. 

Navi Technologies launched its general insurance business through the acquisition of DHFL General Insurance in February 2020. During the nine months ended December 31, 2021, its gross written premium (GWP) was Rs 66.76 crore, of which Rs 6.33 crore was from the retail health insurance segment. 

It issued a total of 2.21 lakh insurance policies during that period of which 27,800 were retail health insurance policies. Share of retail health insurance policies rose to 15.70 per cent during the quarter ended December 31, 2021 from 4.14 per cent during the quarter ended June 30, 2021. 

Navi Technologies commenced its asset management business through the acquisition of Essel Asset Management Company in February 2021. Its first passive fund - Navi Nifty 50 Index Fund - launched in July 2021 had an AUM of Rs 167.32 crore as on December 31, 2021. Since the launch of the business, it has filed for 17 new passive funds with the Securities and Exchange Board of India (SEBI). 

Lastly, the company offers microfinance loans through its subsidiary, Chaitanya India Fin Credit Private Limited, which was acquired in March 2020. As on December 31, 2021, its microfinance business had a closing AUM of Rs 1,808.9 crore.  

Meanwhile, the company has also applied for a universal banking license with the RBI, which will enable it to offer a wider range of financial products and services. 

 

Is the company profitable? 

Not really. For the financial year ended March 31, 2021, the company registered a profit of Rs 73.02 crore though the previous two fiscals saw the firm making losses to the tune of Rs 5.92 crore in FY20 and Rs 2.07 in FY 19. 

However, the company has registered a loss of Rs 213.8 crore on a total income of Rs 719.4 crore for the nine months ended December 31, 2021. Navi Technologies registered a spike in total income in FY21 at Rs 780.02 crore – it was much higher than the two previous fiscal when the total income was pegged at Rs 207.02 crore in FY20 and Rs 16.95 crore in FY19. 

What will the IPO proceeds be used for? 

The company plans to raise funds for its two subsidiaries - Navi Finserv Private Limited (NFPL) and Navi General Insurance Limited (NGIL) – having allocated Rs 2,370 crore for the former and Rs 150 crore for the latter. While NFPL houses the personal & home loan businesses of the company, NGIL manages the insurance segment. 

What is the average cost of acquisition per equity share for Sachin Bansal? 

As per the DRHP, the average cost of acquisition per equity share for Bansal is Rs 137.22. He acquired shares in October 2019 at Rs 130 apiece and then at Rs 140.50 in March 2020. He owns a stake of 97.77 per cent.

Also Read: Zomato stock rises over 4% after firm buys stake in Mukunda Foods

Also Read: Zomato stock rises over 4% after firm buys stake in Mukunda Foods