BharatPe's Merchant-Centric Strategy Propels Turnaround by 2025, Yet Questions Remain About Future Actions
In the rapidly evolving world of fintech, BharatPe stands out as a shining example of success in merchant lending. Despite regulatory challenges and intense industry competition, the company has managed to achieve significant growth and profitability.
Focus on Profitability and Disciplined Execution
BharatPe reported an adjusted profit before tax of Rs 6 crore in FY25, a remarkable turnaround from a Rs 342 crore loss the previous year. This reflects disciplined execution, cost management, and a focus on building scalable, revenue-generating businesses.
Increased Ownership and Control in Trillionloans
By increasing ownership in Trillionloans, BharatPe's lending subsidiary, to 74%, the company has greater command over credit underwriting and lending operations. This contributes to improved margins and profitability.
Diversification into Full-Stack Payment Aggregation
Besides merchant lending, BharatPe has been building a full-stack payment aggregation business. It received the Reserve Bank of India’s final approval for a Payment Aggregator (PA) license, enabling it to process payments in-house, reducing dependency on third parties and lowering costs.
Building an In-House UPI Payment Switch
BharatPe developed its own UPI switch integrated with NPCI (National Payments Corporation of India). This allows the company to process payments efficiently and offer better settlement cycles and collection efficiency for merchant advances, improving liquidity and competitiveness against rivals like Paytm and PhonePe.
Strategic Leadership and Banking Partnerships
Senior leadership with payments and banking expertise, such as Sandeep Indurkar (formerly of ICICI Bank and Unity SFB), has strengthened BharatPe’s backend infrastructure and strategic direction.
Competitive Fundraise and Investor Backing
BharatPe is targeting a $80-100 million fundraise to support growth, signaling strong investor confidence. This capital infusion supports expansion despite market volatility and regulatory scrutiny.
Leveraging Technological Advances and Merchant-Centric Approach
Offering faster settlement cycles and efficient loan disbursals helps BharatPe serve merchants better amid stiff competition, thereby increasing customer stickiness and loan portfolio quality.
Expanding Partnerships with NBFCs
In FY25, BharatPe partnered with five additional NBFCs, bringing the total to eight.
The Future Outlook
BharatPe is not among the leading UPI players, but it is preparing for the future. The company is watching the performance of other payments companies like Pine Labs, PhonePe, and others, who are likely to list on the stock exchanges before BharatPe, as a litmus test for the fintech industry.
The average ticket size of loans at BharatPe is INR 1 Lakh and the weighted average tenure is 11 months. The revenue share from the payments business at BharatPe has remained constant in FY25 on a YOY basis. BharatPe claims a continuous decline in non-performing assets and bad loans, but no numbers were shared.
The company's focus on merchant lending has been a key factor in improving efficiency and reducing dependency on NBFCs. BharatPe does not engage in small-ticket, unsecured P2P loans.
In summary, BharatPe’s growth and profitability stem from its integrated technological infrastructure, increased lending control, prudent cost management, strategic diversification, and strong investor and leadership support, enabling it to navigate regulatory challenges and industry competition effectively.
- In the journey towards profitability, BharatPe's strategic focus on building scalable, revenue-generating businesses, and disciplined execution in cost management has enabled them to report an adjusted profit before tax of Rs 6 crore in FY25, a dramatic turnaround from a loss of Rs 342 crore the previous year.
- With greater command over credit underwriting and lending operations, BharatPe's increased ownership in Trillionloans to 74% contributes to improved margins and profitability, signifying the company's calculated approach in boosting its financial standing.
