IPO-Bound Avanse’s PAT Doubles To INR 342.4 Cr In FY24, Operating Revenue Surges 74%

IPO-bound non-banking financial company (NBFC) Avanse Financial Services’ net profit more than doubled to INR 342.4 Cr in the financial year 2023-24 (FY24) from INR 157.7 Cr in the previous fiscal year. The startup claimed to have clocked the second-highest profit after tax among education-focussed NBFCs in the country in the reported fiscal.

As per the company’s draft red herring prospectus (DRHP), Avanse’s operating revenue also jumped 74.5% to almost INR 1,727 Cr in FY24 from INR 989.6 Cr in the previous year. 

Founded in 2013, Avanse provides education financing for students and educational institutions in the country. Its financing solutions cater to students’ higher education in India and abroad. The company also offers skill enhancement loans. 

Its revenue from operations comprises interest income, fees and commission income, net gain on fair value changes, and net gain on derecognition of financial instruments on amortised cost basis.

Avanse’s interest income surged 61.6% year-on-year (YoY) to INR 1,443.7 Cr in the reported fiscal. The startup’s interest income primarily comprises interest on loans to its customers as well as interest on its investments and deposits held with banks.

Its fees and commission income grew over 175% YoY to INR 184.3 Cr in FY24 while net gain on the derecognition of financial instruments on amortised cost basis surged over 270% YoY to INR 85.7 Cr.

Avanse’s fees and commission income comprise foreign exchange commissions, insurance commissions, and prepayments and other charges.

Overall, including other income, Avanse’s total revenue stood at INR 1,728.8 Cr in FY24 as against INR 990.2 Cr the previous year.

Where Did Avanse Spend?

Total expenses jumped almost 63% to INR 1,269.5 Cr during the year under review from INR 778.9 Cr in FY23, with finance costs continuing to be the largest contributor.

Finance Costs: The startup spent INR 875.6 Cr in this bucket, which grew over 62% YoY.

This cost head includes interest expense on borrowings, debt securities, securitisation liabilities, and interest expense on lease liabilities.

Employee Cost: Avanse spent INR 140.9 Cr in total towards employee benefits which jumped 48.6% from INR 94.8 Cr in FY23.

The startup said that the rise was primarily due to an increase in salaries, bonuses and other allowances to INR 124.5 Cr in FY24, as its total employee count zoomed to 606 as of March 31, 2024 from 463 as of March 31, 2023 and due to annual increments.

Other Expenses: Avanse’s spending in this bucket grew over 81% YoY to INR 152.8 Cr in FY24. This bucket includes business sourcing expenses, IT expenses, and manpower outsourcing expenses.

Avanse filed its DRHP with SEBI last week for an INR 3,500 Cr IPO. Its IPO comprises a fresh issue of shares worth INR 1,000 Cr and an offer for sale (OFS) component of shares worth up to INR 2,500 Cr.

It plans to use the proceeds from the fresh issue to increase its capital base to fuel further business expansion.

Earlier this year, the NBFC raised a primary capital of INR 1,000 Cr ($120 Mn) from Abu Dhabi-based investment firm Mubadala Investment Company and Avendus PE Investment Advisors Private Limited.