Apollo Finvest (India) Limited has reported its financial results for the first quarter, showcasing strategic enhancements in its operations and product offerings. The company's quarterly performance and new initiatives highlight its focus on strengthening partnerships and leveraging technology in the digital lending space.

Financial Performance

For Q1, Apollo Finvest reported revenue of approximately ₹7.00 crores and a profit before tax of close to ₹3.00 crores. The company's other income saw a significant boost of ₹2.00 crores, attributed to the sale of its previous office property.

Enhanced Due Diligence Process

Apollo Finvest has implemented a more comprehensive due diligence process for evaluating partner NBFCs. The company's team has physically visited 4-5 cities, spending entire days understanding the culture and operations of potential partners. This approach goes beyond traditional financial analysis, allowing Apollo to gain deeper insights into the DNA of the companies they consider partnering with.

Mikhil Innani, Managing Director and CEO, emphasized the importance of this enhanced process: "Sitting on the ground, understanding what they're exactly doing, how they function, the culture, the vibe. All of these things has given us a very deep understanding of the company who we are wanting to partner with."

Introduction of Warehouse Term Loan Product

The company has launched a new warehouse term loan product, which provides deeper integration and control over partner NBFC operations. This innovative product involves creating dedicated disbursement and collection accounts, allowing Apollo to maintain greater oversight of cash flows and lending practices.

Innani described the product as "a perfect marriage of lending combined with tech," highlighting its potential to build robust structures that can allow relationships to scale tremendously.

Portfolio Composition and Strategy

Apollo Finvest currently maintains a 60/40 split between term loans and retail loans. The company's goal is to shift towards a 70% retail and 30% wholesale book in the future. This strategy aims to capitalize on the company's extensive experience in digital lending while maintaining a balanced portfolio.

Technological Advancements

The company continues to develop its AI-powered compliance monitoring tool, Senti, which uses artificial intelligence to monitor call quality and ensure compliance in customer interactions. Additionally, Apollo is testing AI voice calling for collections, which could potentially revolutionize the efficiency and compliance of the collection process.

Partnerships and Distribution

Apollo has established partnerships with top-tier fintech companies across various segments, including those serving salaried employees, blue-collar workers, and women borrowers. These partnerships are part of the company's strategy to diversify its portfolio and expand its reach in the digital lending space.

Financial Metrics

The company reported a cost of capital at sub-12%, with term loan returns of 16-17% XIRR (Extended Internal Rate of Return). This spread indicates healthy margins on its lending activities.

Industry Outlook

Management noted that the revenue decline was partly due to industry volatility and regulatory changes, with several NBFCs facing difficulties. However, they expressed optimism about the future, citing increased maturity in the digital lending ecosystem and a higher proportion of profitable companies in the sector.

Innani stated, "Today, I would say more than 60-70% of the industry today is potentially profitable, right? So I think the industry is widely changing, and that is very, very helpful."

As Apollo Finvest navigates the evolving digital lending landscape, its focus on enhanced due diligence, technological innovation, and strategic partnerships positions the company to capitalize on the maturing fintech sector while maintaining a prudent approach to risk management.

Apollo Finvest (India) Limited, a non-banking financial company (NBFC), has reported a mixed set of financial results for the quarter ended June 30. While the company faced a significant decline in revenue, it managed to improve its profitability compared to the previous quarter.

Revenue Performance

Apollo Finvest reported revenue of Rs. 521.11 lakhs for Q1, marking a substantial decline of 29.5% year-on-year from Rs. 739.51 lakhs in the same quarter last year. The revenue also decreased by 35% quarter-on-quarter from Rs. 802.16 lakhs in the previous quarter.

Profit Trends

Despite the revenue contraction, Apollo Finvest demonstrated resilience in its bottom line. The company's net profit for the quarter stood at Rs. 231.02 lakhs, showing a remarkable improvement of 121.8% compared to the previous quarter's Rs. 104.13 lakhs. However, on a year-on-year basis, the net profit saw a marginal decline of 1.8%.

Key Financial Metrics

Apollo Finvest maintained an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of Rs. 293.97 lakhs for the quarter. The company reported an Earnings Per Share (EPS) of Rs. 6.19, indicating its profitability on a per-share basis.

Financial Position

The NBFC's debt-equity ratio stands at 0.34, suggesting a conservative approach to leverage. This ratio indicates that the company has been prudent in managing its debt levels relative to its equity, which could be viewed positively by investors and stakeholders.

Management Commentary

While specific management comments were not provided, the company's ability to significantly improve its quarterly profit despite revenue challenges suggests effective cost management and operational efficiency measures.

Outlook

As the financial services sector continues to navigate through various economic challenges, Apollo Finvest's mixed results reflect both the pressures on revenue generation and the company's efforts to maintain profitability. The substantial quarter-on-quarter profit growth may indicate the company's resilience and adaptability in a challenging business environment.

Investors and market observers will likely keep a close watch on Apollo Finvest's performance in the coming quarters to see if the company can sustain its profit growth while addressing the revenue decline.