Mumbai, Oct 18
Fintech firm Lendingkart is facing a cash crunch as the company's profit margin declined in recent years and its valuation has reportedly nosedived by more than 60 per cent.
According to a report, the company reported a loss of Rs 24.87 crore in the June quarter of FY 2024-25, compared to net profit of Rs 25.63 crore in the same quarter of the previous financial year (FY24).
Ahmedabad-based Lendingkart's operating margin in the first quarter of FY 2024-25 was 12.62 per cent, as against 31.62 per cent in the same quarter of the previous financial year.
However, the company's sales increased by 18.57 per cent year-on-year to Rs 272.93 crore in the June quarter of the current financial year, as per reports.
According to reports, due to a cash crunch, the company, which was valued at $350 million during its last funding round -- which was four years ago -- is now trying to raise funds at a valuation of a mere $100 million -- a valuation drop of more than 60 per cent.
After the pandemic, Lendingkart was successful in earning profit. In the financial year 2022-23, the company's profit was Rs 119 crore, but in the financial year 2023-24, the company registered a profit of only Rs 3 crore, as per its financials.
Lendingkart's financial performance has been impacted by factors such as increased cost of credit, the RBI's first loss default guarantee rule and the move towards co-lending with other lenders that negatively impacted the company's business.