CRED Mulling Investing INR 550 Cr In NBFC Newtap Finance

CRED Mulling Investing INR 550 Cr In NBFC Newtap Finance

SUMMARY

CRED had AUM worth INR 19,000 Cr as of December 2024 and NPAs of 1.1% compared to 0.73% in FY24 and 0.59% in FY23

the ratings agency assigned an 'IND BBB' rating to NFPL with a “stable outlook” for both its non-convertible debentures and bank loan facilities

The ratings agency’s report noted that NFPL’s total AUM stood at INR 1,141.6 Cr at the end of December 2024

Fintech major Cred is planning to pump INR 550 Cr in its non-banking finance company (NBFC) Newtap Finance Pvt Ltd (NFPL), as per a report by India Ratings and Research.

“NFPL plans to raise additional equity capital of INR 5,500 Mn over the near-medium term from its promoter’s wholly-owned subsidiary Newtap Technologies Pvt. Ltd. (holds 74% stake in NFPL) and CRED, subject to regulatory approvals,” read the report.

Incorporated in 2021, NFPL is an NBFC that offers short-term personal loans to CRED users. Kunal Shah indirectly owns 76% in the NBFC via Newtap Technologies, in which he owns 100% stake, while 23.6% stake is owned by CRED. Shah and his brother Rohan Shah also hold the position of directors in Newtap Technologies. 

The India Ratings and Research report also underlined that CRED had assets under management (AUM) worth INR 19,000 Cr as of December 2024 and non-performing assets (NPAs) of 1.1% compared to 0.73% in fiscal year 2023-24 (FY24) and 0.59% in FY23. The ratings agency attributed this relatively-low NPA ratio to CRED’s focus on affluent customers.

Meanwhile, the ratings agency assigned an ‘IND BBB’ rating to NFPL with a “stable outlook” for both its non-convertible debentures and bank loan facilities. 

“The rating reflects Newtap Finance’s robust technology-driven lending model and partnership with CRED, which maintains a 23.7% stake in the company. At the core of NFPL’s operations is a sophisticated multi-layered risk assessment framework that combines automated pre-approval processes with real-time underwriting decisions,” NFPL said in a statement. 

The ratings agency’s report noted that NFPL’s total AUM stood at INR 1,141.6 Cr at the end of December 2024. Of this, INR 632 Cr was on its books while the remaining was via its partnership with co-lending partners such as banks and other NBFCs. 

“At end-December 2024, NFPL had unencumbered cash and cash equivalents, sanction lines and undrawn banking lines of around INR 1,130 Mn (INR 113 Cr); this is more than sufficient to meet the debt obligations of INR 887.3 Mn (INR 88.7 Cr) (total outflows over the next three months) assuming nil collections and disbursements…,” read the report. 

The ratings agency’s report also said that the average loan ticket size for NFPL stood at INR 1 Lakh at the end of December 2024, with a maximum tenor of 60 months and an average interest rate of 18%.

It added that NFPL primarily catered to salaried individuals (60% of the total AUM as of December 2024), while self-employed individuals with “high credit scores” contributed the remaining 40% to the total loan book. 

On a standalone basis, NFPL’s net interest margins (NII) fell to 3.9% in the nine-month period ended December 2024 from 4.8% during the same period last fiscal on account of a “slight fall in yields due to slowdown in disbursements in 1H FY25 and a rise in the average cost of borrowings, largely due to repricing of floating-rate loans”. 

Overall, the NBFC reported a loss before tax of INR 5.35 Cr during April-December 2024 as against a profit of INR 3.17 Cr in the entirety of FY24. 

It is pertinent to note that NFPL, previously known as Parfait Finance, was acquired by Newtap Technologies in 2021. The new entity was rebranded as NFPL and started operations in FY22. 

This comes at a time when CRED has pushed the pedal on diversifying its offerings. In December, Inc42 reported that the company is piloting a new feature which allows users of the app to use CRED Coins at offline stores and for online purchases. The fintech major also recently forayed into the insurance space in partnership through its vehicle management platform CRED garage.

Last month, the Kunal Shah-led company also announced the launch of the beta version of its CRED e₹ CBDC wallet in collaboration with the Reserve Bank of India (RBI).

On the financial front, CRED saw its operating revenue jump 71% to INR 2,397 Cr in FY24 from INR 1,400 Cr in the previous fiscal year. However, net loss rose 22% to INR 1,644 Cr in the same fiscal year from INR 1,347 Cr in FY23.

You have reached your limit of free stories
Become A Startup Insider With Inc42 Plus

Join our exclusive community of 10,000+ founders, investors & operators and stay ahead in india's startup & business economy.

2 YEAR PLAN
₹19999
₹7999
₹333/Month
UNLOCK 60% OFF
Cancel Anytime
1 YEAR PLAN
₹9999
₹4999
₹416/Month
UNLOCK 50% OFF
Cancel Anytime
Already A Member?
Discover Startups & Business Models

Unleash your potential by exploring unlimited articles, trackers, and playbooks. Identify the hottest startup deals, supercharge your innovation projects, and stay updated with expert curation.

CRED Mulling Investing INR 550 Cr In NBFC Newtap Finance-Inc42 Media
How-To’s on Starting & Scaling Up

Empower yourself with comprehensive playbooks, expert analysis, and invaluable insights. Learn to validate ideas, acquire customers, secure funding, and navigate the journey to startup success.

CRED Mulling Investing INR 550 Cr In NBFC Newtap Finance-Inc42 Media
Identify Trends & New Markets

Access 75+ in-depth reports on frontier industries. Gain exclusive market intelligence, understand market landscapes, and decode emerging trends to make informed decisions.

CRED Mulling Investing INR 550 Cr In NBFC Newtap Finance-Inc42 Media
Track & Decode the Investment Landscape

Stay ahead with startup and funding trackers. Analyse investment strategies, profile successful investors, and keep track of upcoming funds, accelerators, and more.

CRED Mulling Investing INR 550 Cr In NBFC Newtap Finance-Inc42 Media
CRED Mulling Investing INR 550 Cr In NBFC Newtap Finance-Inc42 Media
You’re in Good company