The Bengaluru-based fintech company is looking to raise INR 4,020 Cr ($530 Mn) through the IPO
While Navi Technologies reported a loss of INR 362 Cr in FY 2022, key subsidiaries including Navi Finserv and Navi General Insurance too recorded a loss of INR 67 Cr and INR 61 Cr
This may not be the ideal time for Navi to go public, but then, Navi could be compelled to proceed with the IPO as the only option to secure crucial funding, believe experts
Flipkart founder Sachin Bansal is all set to write a new chapter in India’s startup history with the upcoming IPO of his fintech venture Navi Technologies. But unlike other listed startup behemoths like Nykaa, Paytm (One97 Communications) or Zomato, Navi is betting on one of the oldest and most popular business segments – lending, to be precise.“There are even possibilities that the company may touch the magical INR 20K Cr valuation in the RHP/final offer document while going for the IPO,” they added.Santosh N, the managing partner, D&P Advisory India and a valuation expert, explained the methodology for valuing different types of companies. “If it is an NBFC, the valuation multiple on P/B (share price-to-book value ratio) typically ranges between 2-4x. But for technology platforms, the multiple could go higher as the expected growth is much higher.”In its lending survey, the central bank observed that bankers remain upbeat on loan demand during the second and third quarter of 2023-24 across the major categories of borrowers.“Navi’s listing I hope will be different from the other tech startups’ [Paytm, Nykaa ] IPOs we have seen so far,” said Sreedhar Prasad, Advisor and Investor.“Navi derives the brand value and credibility from Sachin Bansal, who built the biggest Indian startup and sold it at $16 Bn in the largest e-commerce deal ever struck anywhere in the world,” observed Sunil Bansal, founder and CEO of DCB Advisory, a Delhi-based firm helping corporate houses with investments, M&A and more.Although both NBFCs saw a manifold rise in assets under management (AUM), Navi Finserv, the group’s flagship, reported a loss of INR 67 Cr in FY22. The company’s annual report attributed the loss to a rise in expenses, which escalated by 167%.While expressing concerns over the company’s recent losses, Prasad said, “However the unit economics for lending businesses need to be strong and predictable and not supposed to make losses. Losses in the initial days due to marketing should not be the way forward.”“Sachin has already burnt his fingers regarding the VCs. It’s not that investors did not want to invest in Navi. But they did not agree when Bansal tried to overrule certain terms and conditions of the term sheet,” a person close to one of the funding developments told Inc42.As far as unlisted stocks are concerned, the ripple effect is not there. The demand queries are low. Manish Khanna, founder of Unlisted Assets said, “After the RBI declined Navi’s universal banking license, the confusion remains — whether the company wants to remain an NBFC primarily or would try to acquire a banking license again. Investors need more clarity.”
For Navi, it has been a proven business model for years.