Business Profile of Navi Technologies Limited
Navi Technologies Limited is a technology-driven financial products and services provider in the Indian market, focusing on the digitally connected young middle-class population. The company has adopted a mobile-first approach by utilizing strong in-house technology and product expertise to build customer-centric products. The company's diverse offerings include microfinance loans through a subsidiary the “Chaitanya” brand. Operating under the brand of “Navi”, the company's diverse offering includes personal loans, home loans, general insurance, assets management, and microfinance loans. In the general insurance business, it acquired DHFL General Insurance Limited in February 2020. In the mutual fund space, the company launched ETFs and has mutual fund assets worth ₨930 cr. However, the majority of business comes from microfinance where the company had assets under management of ₨ 1808 cr in Q3 of FY22.
IPO Objective of Navi Technologies Limited
As per the draft red hearing prospects, the IPO issue consists only fresh issue. The fresh issue consists of XXXX shares at the face value of ₨ XXXX each aggregating up to ₨33,500.00 millions. There are fresh shares issues by company and main objective of company for listing is investment in subsidiaries companies and general corporate purpose.
IPO Details of Navi Technologies Limited:
| IPO Open Date | N.A. |
| IPO Close Date | N.A. |
| Basis of Allotment | N.A. |
| Listing Date | N.A. |
| Face Value | ₹XXXX per share |
| Price | N.A. |
| Lot Size | N.A. |
| Total Issue Size | Up to XXXX Equity Shares |
| Aggregating up to ₹ 62000.00 million | |
| Fresh Issue | Up to XXXX Equity Shares |
| Aggregating up to ₹33,500.00 million | |
| Offer For Sale | N.A |
| N.A | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not more than 75% of the Net Issue |
| Retail Shares Offered | Not more than 10% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15% of the Net Issue |
Issue Price & Size of Navi Technologies Limited
The issue price of Navi Technologies Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company has fresh issue aggregating up to ₹ 3,350 cr at the price of ₨XXXX.
Launch Date of Navi Technologies Limited IPO
The IPO opening date of Navi Technologies Limited hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.
Financial Statements of Navi Technologies Limited:
| Particulars | Ended,31 Dec 2021 | FY, 31 March 2021 | FY, 31 March 2020 | For period 10, Dec 2018 to 31, Mar 2019 |
| I. Income | ||||
| Revenue from operations | 965.75 | 1,366.63 | 559.48 | 125.70 |
| Interest income | 4,376.33 | 4,509.53 | 1,639.33 | 1.47 |
| Other income | 36.08 | 9.12 | 11.54 | - |
| Net gain / ( loss ) on fair value changes | 1,684.20 | 1,725.08 | ( 148.76 ) | 42.35 |
| Net gain on derecognition of financial | 131.43 | 189.81 | 8.57 | - |
| instruments under amortized cost category | ||||
| Total income | 7,193.79 | 7,800.17 | 2,070.16 | 169.52 |
| II . Expenses | - | |||
| Employee benefits expense | 2,107.42 | 1,696.74 | 616.14 | 58.11 |
| Finance costs | 1,371.05 | 882.10 | 370.26 | 0.87 |
| Depreciation and amortization expense | 357.32 | 406.59 | 89.33 | 1.69 |
| Impairment on financial instruments | 1,042.74 | 1,872.44 | 238.21 | - |
| Policyholders expense of insurance operations | 429.58 | 668.17 | 148.52 | - |
| Other expenses | 4,356.17 | 1,211.52 | 578.43 | 65.73 |
| Total expenses | 9,664.28 | 6,737.56 | 2,040.89 | 126.40 |
| III . ( Loss ) / Profit before tax | ( 2,470.49 ) | 1,062.61 | 29.27 | 43.12 |
| IV . Tax expense | ||||
| Current tax expense | 129.49 | 641.71 | 215.14 | 21.89 |
| Deferred tax ( credit ) / expense | ( 535.71 ) | ( 290.98 ) | ( 105.16 ) | 0.54 |
| Total Tax expense | ( 406.22 ) | 350.73 | 109.98 | 22.43 |
| V. Net ( Loss ) / Profit for the period / year | ( 2,064.27 ) | 711.88 | -80.71 | 20.69 |
Financial Ratio’s of Navi Technologies Limited:
| Particulars | As at 31 Dec, 2021 | As at 31-03-2021 | As at 31-03-2020 | As at 31-03-2019 |
| Current ratio | 2.21 | 4.04 | 4.43 | 10.96 |
| Debt Equity ratio | 0.71 | 0.43 | 0.2 | 0.06 |
| Debt Service Coverage Ratio | -0.02 | 0.24 | 0.07 | 0.74 |
| Return on equity ratio | -5.53% | 1.81% | -0.20% | 3.90% |
| Net capital turnover ratio | 0.29 | 0.22 | 0.08 | 0.33 |
| Net profit ratio | -0.29 | 0.09 | -0.04 | 0.12 |
| Return on Capital employed | -3.04% | 4.92% | 0.98% | 8.29% |
Promoters & Shareholding of Navi Technologies Limited
As of date, according to the DRHP filled by Navi Ltd. Company have only one promoter “Sachin Bansal” who hold 97.77% shares in company.
| Category of shareholder | Number of shareholder’s | Numbers of Shares | % of Shareholding |
| Promoter and Promoter Group | 1 | 28,17,25,980 | 97.77% |
| Public | 24 | 63,75,524 | 2.21% |
| Total | 25 | 28,81,01,504 | 99.98% |
Should You Subscribe To Navi Technologies Limited IPO Or Not?
While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.
Competitive Strengths of Navi Technologies Limited:
Efficient Mobile First Approach
Navi mobile first approach enables it to serve customers in much less time frame. The model of company enables it to avoid intermediation and reach customer directly in tier-1 cities and beyond. Cater to digitally offer unassisted buying journey with lowest turnaround times amongst lender in India in personal loan category, as per RedSeer report. The company has designed their app in such manner to make customer journey seamless, with simple & easy to understand products. For example the entire process from loan application and disbursal to repayment is paperless and worked digitally.
Ownership of Product
The company's end-to-end ownership allows it to innovate and design product processes. The ability to develop simple and intuitive products from scratch ensures full ownership of its products. Navi Ltd. has limited dependency on third parties because the company owns the entire value chain right from in-house technology to product designing. It helps the company to regularly improve and iterate its product features and deploy them to the market quickly.
In-House Technology
The company made a significant investment in its technology upgrade which led to a full-stack approach. Navi Ltd. has in-house technology development comprises customer-facing portals, loan management, and accounting capabilities that help in high transaction volumes. The in-house underwriting engines run on artificial intelligence and machine learning models which is a self-developed policy engine that helps in fraud risk management capabilities for fraud detection and multiple process automation workflows to enable efficient back-end operations.
One-Stop Shop
The company offers a comprehensive range of financial services solutions under the Navi brand including personal loans, general insurance, home loans, and mutual funds. The digital operating model with an end-to-end ecosystem and one-stop approach enables company to offer their products and services at low cost. In this company analyze customer behavior and interest across different products and uses data analytics to drive conversion and cross-sell opportunities.
Risk Factors of Navi Technologies Limited:
Risk of Change in Interest Rate
The company is affected by volatility in interest rates in both lending and treasury operations. Interest rate highly sensitive and too many factors are beyond control including the monetary policy of the RBI, the Deregulation of the financial sector in India, and domestic and international economic and political conditions. In a rising interest rate environment especially when the rise is sudden or sharp, in this situation company's net interest income may vary and consequently affect the profitability of the company.
Information Security Risk
Navi Ltd. may face risks related to information security threats. The information security risk for technology-focused companies and financial services organizations has increased significantly in recent years because of the proliferation of new technologies, increased digitization of company products and services, and use of internet and telecommunications technologies to make financial transactions. Any activity or event that exploits our network and support services may cause damage to our reputation and adversely affect on business & financial performance.
Large Capital requirement
The liquidity and profitability of company business related to lending and microfinance are largely associated with the cost of raising financing. The financial requirements of the company have been met from various sources which include bank loans, working capital facilities, loans from nonbanking financial companies, non-convertible debentures, commercial paper, and equity. The future lending and microfinance business of the company depends on the ability to access a variety of sources of capital and any disruption in company sources could negatively affect liquidity and financial condition.
Government Regulation
Navi Ltd. is subjected to laws and regulations governing the lending, insurance, assets management, and financial services industry in India. The rules and regulations related to the business of a company have become increasingly complex and are continuously evolving. As an NBFC-MFI company also subject to the RBI guidelines on financial regulation of NBFCs including capital adequacy and other master directions. Any new law and regulations could adversely affect company business, operations, and cash flows.
Navi Technologies Limited Grey Market Premium
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the Navi Technologies Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
