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Lendingkart Finance Reports Massive Loss in FY25: What Went Wrong?

Lendingkart Finance, the digital lending arm of the Temasek-backed Lendingkart Group, has hit a financial rough patch. For the financial year ending March 2025, the company reported a net loss of ₹288.3 crore—marking a dramatic turnaround from the ₹60 crore profit it enjoyed just a year ago.

The loss before tax ballooned to ₹396 crore, sending shockwaves across the investor community and triggering a breach in critical bond agreements. What happened, and what does this mean for the future of one of India’s most recognized digital lenders? Let’s break it down.

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A Sudden Financial Freefall

From Profit to Loss in Just One Year

The decline in Lendingkart Finance’s performance was swift and steep. In FY24, the company had shown promising growth and turned a respectable profit. But FY25 brought a complete reversal.

• FY24: ₹60 crore profit
• FY25: ₹288.3 crore net loss, ₹396 crore pre-tax loss

So, what caused this sudden slide?

Revenue Took a Hit, While Costs Surged

Although Lendingkart still generated revenue, it wasn’t enough to offset its rising expenses. The company faced two major issues:

1. Shrinking Revenue – The company’s top-line growth slowed down significantly, due to competitive pressure and tighter market conditions.
2. Ballooning Loan Loss Provisions – As defaults increased or were anticipated to rise, Lendingkart had to set aside more money to cover potential bad loans.
3. Higher Operational Costs – Operating expenses increased sharply, including employee costs, marketing, and technology investments.

Together, these factors pushed the company deep into the red.

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Bond Trouble: Breach of Covenant Shakes Investors

In January 2024, Lendingkart Finance raised ₹75 crore by issuing a senior secured bond with an interest rate of 11.25%. But there was a catch—one of the bond terms required the company to remain profitable before tax throughout the bond’s duration.

With the massive losses reported, that condition has now been breached.

What Does This Breach Mean?

Technically, the breach gives bondholders the power to:

• Demand early repayment
• Terminate the credit facility

However, bondholders are expected to grant a waiver for now. Here’s why:

• Coupon payments are still being made on time
• The bonds are backed by a corporate guarantee from Lendingkart’s parent company, Lendingkart Technologies Pvt Ltd

While the waiver offers temporary relief, it underlines the risk exposure and raises questions about the company’s financial stability.

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What Triggered the Collapse?

The Co-Lending Conundrum

In recent years, Lendingkart shifted heavily toward a co-lending model. This means it partners with banks or financial institutions to disburse loans, sharing both the credit risk and the interest income.

While this model helped Lendingkart scale its loan book—Assets Under Management (AUM) grew rapidly—it also:

• Capped the interest income Lendingkart could earn
• Increased dependency on external partners
• Limited profitability even as loan volumes rose

Credit Costs Keep Rising

The post-COVID lending landscape has been tough, especially for small business loans. The micro, small, and medium enterprises (MSMEs) that Lendingkart primarily serves are still recovering from economic disruptions. This has led to:

• Higher loan defaults
• Increased provisioning for non-performing assets
• A cautious lending approach that restricts revenue growth

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Investors Take Note: Valuation Cut and Control Change

The financial stress didn’t go unnoticed by investors. In a major shift, Fullerton Financial Holdings (FFH), backed by Singapore’s Temasek, acquired a controlling stake in Lendingkart for ₹252 crore. This deal also came with a deep cut in the company’s valuation—from around $350 million to just $100 million.

This more than 60% drop in valuation reflects how seriously investors are taking Lendingkart’s financial challenges.

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Can Lendingkart Recover?

The company is down, but not necessarily out.

Here are a few reasons why a turnaround is still possible:

• Strong Brand Presence in MSME Lending – Lendingkart remains a well-known player in India’s digital lending space.
• Backed by Deep-Pocketed Investors – With FFH stepping in with capital and control, Lendingkart has access to both strategic guidance and funding.
• Focus on Risk Management – The shift to co-lending, though limiting in revenue, does reduce balance sheet risk—if executed correctly.

That said, it’s clear that the path to profitability won’t be easy. Lendingkart will need to:

• Cut unnecessary costs
• Improve underwriting and risk controls
• Balance scale with sustainable margins
• Navigate regulatory and market headwinds

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Final Thoughts

Lendingkart’s FY25 performance is a reality check for India’s fintech lending space. High growth does not guarantee sustainable profits, especially when credit quality and market conditions are uncertain.

With bondholders watching closely and investors demanding better performance, the pressure is on. The coming quarters will be crucial for Lendingkart to prove that it can not only lend fast—but manage its books wisely too.

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