BankBazaar, a fintech company that issues credit cards, checks credit scores, and cross-sells third-party loans and insurance products, is reportedly eyeing an IPO by 2024. The company claims to have touched Rs 160 crore in revenue and EBITDA profitability for FY23, with a 50% growth in scale and a reduction in losses in FY22. The company’s revenue of Rs 95.52 crore in FY22 was earned from commissions earned from banks based on customer applications on its platform. Meanwhile, employee benefits formed the largest expenditure, accounting for 57.6% of the overall expenditure, while the company’s losses reduced to Rs 43.23 crore in FY22 from Rs 58.25 crore in FY21. However, the company’s ROCE and EBITDA margin stood at -656.37% and -38.37% during FY22, respectively, and the company spent Rs 1.47 to earn a single rupee on a unit level. The company faces competition from many new players moving in at every end of the chain, and it is uncertain whether it has made a strong enough brand or any other moat that will provide it a long-term advantage.
According to BankBazaar’s consolidated financial statement with the RoC, employee benefit was the largest expense item, accounting for 57.6% of the overall expenditure and increasing 3.4% to Rs 80.65 crore in FY22 from Rs 77.98 crore in FY21. Additionally, the company’s marketing and information technology costs increased significantly in FY22, with a 24.3% increase to Rs 22.29 crore and a 58.9% increase to Rs 8.77 crore, respectively. The statement is suggesting that while BankBazaar has had the advantage of being an early entrant in the fintech space and building strong relationships, the increasing competition in the market may undermine this advantage. Moreover, the pressure of turning a profit after operating for a long time without being profitable can be daunting for the founders. Therefore, the statement highlights the importance of having a sound plan in place to justify the long wait and compete effectively in the market.