IPO-bound Hero Fincorp sees 80% rise in losses from bad loans, profit tumbles

Hero Fincorp’s Bad Loan Losses Up 80%, Profit Drops Ahead of IPO.

Expert Analysis:

• Rising Loan Write-Offs: Hero Fincorp’s loan write-offs surged 80% in 9M FY25 to ₹2,180.9 crore from ₹1,214.7 crore in 9M FY24

• Sale of Written-Off Loans: Hero Fincorp sold over 2.95 lakh written-off loans worth ₹1,874.73 crore for just ₹49.85 crore; it had written off ₹1,214.7 crore in 9M FY24, as reported by Moneycontrol on April 8, 2024.

• Assets Under Management (AUM): Hero Fincorp’s AUM reached ₹53,642 crore as of September 30, 2024, with key segments including personal loans (30.7%), 2-wheeler finance (16.9%), MSME loans (24.1% total), corporate loans (9.7%), pre-owned car finance (7.3%), home loans (6.7%), and LAP & others (4.7%), according to ICRA.

• Rising Gross NPA: Hero Fincorp's gross NPA rose to 5.36% as of December 31, 2024, despite efforts to reduce bad loans.

• NPA Trend: After peaking at 7.9% in FY22 due to COVID-19, Hero Fincorp reduced NPAs to 5.38% in FY23 and 4.26% in FY24, but fresh slippages are now impacting the portfolio.

• Profit Decline: Hero Fincorp’s profit after tax dropped 57% to ₹299.35 crore for 9M FY25 due to slippages.

• IPO Approval Pending: The company awaits SEBI approval for its ₹3,668 crore IPO, which includes a ₹2,100 crore primary fundraising for Tier-I capital to support future lending.