Mumbai-based Infinity Fincorp, which provides loans against property for MSME borrowers, has increased its loan book to over Rs 1,000 crore, company founder, MD and CEO Shrikant Ravalkar told FE in an interaction. The lender also closed a $15 million funding round led by Jungle Ventures, which it had announced last year. This took the total funding raised in its Series A to $35 million.
The round also had participation from Archerman Capital and Magnifico, an investor group of HNIs. With these funds, the NBFC plans to increase its loan book to around Rs 1,300 crore in March this year and to Rs 2,000-2,400 crore by March 2026.
To achieve its target AUM, the company also has plans for another round of equity infusion in September-October this year.
“The opportunity to lend in this segment is more than Rs 20 lakh crore, out of which less than 5% has been addressed,” Ravalkar said. He expects to increase the company’s net profit to Rs 47 crore in FY25, from Rs 26 crore in FY24, when its revenue was Rs 144 crore.
Founded in 2016, Infinity Fincorp is primarily present in eight southern and western states, with the maximum number of branches in Andhra Pradesh, Telangana, and Tamil Nadu. With an average ticket size of Rs 4 lakh, most of its borrowers are small vendors, shop owners, repairmen, and financially underserved micro-entrepreneurs.
Few NBFCs that lend to this segment have managed to increase their loan books to more than Rs 1,000, Ravalkar said.
“Had there been a complete ecosystem of GST, income tax, and digital payment footprint, these borrowers would have been easily underwritten by existing fintech players. You have to develop your own templates to asses their income,” he said, adding that these templates guide its credit team on how much income to consider for a particular borrower.
For example, on average, the cash flow of an auto rickshaw driver, irrespective of geography, is broadly in the range of Rs 15,000 to Rs 20,000, with a few outliers. For dairy business owners, Ravalkar explains, we can consider the possible milk yield of a cow or a buffalo of a particular breed to determine the income of the owner. “These are the indirect approaches used to access the income of a borrower in this segment,” he said.
As for the property mortgaged by its borrowers, most of the properties are independent houses. More often, the contribution of the land prices is more than the structure of the land. “In a household, there could be multiple revenue streams and these diverse revenue streams make this segment resilient to macroeconomic shocks,” he said.
In the BFSI sector, NBFCs have attracted the most PE-VC funding over the last four years. For example, Jaipur-based Finova Capital, which also lends to MSME borrowers, had raised $135 million in Series E funding in October. Between FY20 and H1 FY24, NBFCs attracted $10.3 billion across 162 deals, according to a report by RBI Innovation Hub from August.