Peak XV and Tiger Global backed fintech firm Progcap, has been on an astounding growth trajectory for almost two fiscal years, multiplying its revenue from ₹26 crore in FY22 to ₹139 crore in FY24. The losses have also considerably diminished during this period.
Progcap doubled its revenue to Rs 139 crore in FY24 from Rs 71 crore in FY23. Established in the year 2017, Progcap, which is a fintech company, works in the area of providing competitive financing and technology products to empower small and medium businesses in India. The company digitizes supply chains and helps with the flow of finance to last-mile retailers. Revenue from these services is the only source of income for the company.
Progcap increased its income to Rs 159 crore for FY24, comprising Rs 20 crore more from interest on deposits and returns from ongoing investments, against Rs 102 crore for FY23.
Employee benefit expenses proved to be the single largest expenditure for Progcap, accounting for 61% of overall expenditure; this, in FY24, amounted to Rs 124 crore and grew 15% higher than the year previous. Finance costs considerably increased to reach Rs 22.5 crore from Rs 1 crore in FY23. Other significant head items include collection deficiency charges of Rs 9.5 crore; travel expenses of Rs 6 crore; and other heads of miscellaneous charges.
In FY24, Progcap's total costs increased by 36%, reaching Rs 203 crore, as against the previous fiscal's Rs 149 crore. The company, notwithstanding the rise, managed to trim its losses down by 6%, to Rs 46 crore for FY24 from Rs 49 crore for FY23. The ROCE and EBITDA margin stood at -2.96% and -11.32% respectively. In FY24, Progcap spent Rs 1.46 to earn a rupee of operating revenue. Further, the Delhi-based company declared current assets of Rs 1,321 crore, inclusive of Rs 163 crore in cash and bank balances for FY24.
Founded in 2017 by Pallavi Shrivastava and Himanshu Chandra, Progcap has raised around $112 million in funding to date. Leading investors in the fintech platform include Tiger Global, Peak XV, Creation Investments, and GrowX Ventures. Collectively, the two co-founders hold a 23.41% stake in the company.
Many firms in a country of scarce capital initially target the most underserved sectors but eventually migrate to financial services. Progcap, however, has been avowedly engaged in providing financial solutions to this segment right from the start. This strategic trajectory bodes well for the company in terms of potential future growth, although it has seen serious losses so far. These losses must be related to customary challenges in setting up any lending business in the MSME sector and therefore could include hefty initial write-offs that would come quickly into the market, somewhat at the expense of traditional lenders. Progcap seems to have invested heavily in these losses to get enough experience for a fast track forward. The hefty capital raised gives a clear indication of the ambitious plans Progcap has for the future. It will be critical to watch the company in FY25.
