Is BharatPe Back on Track Post Ashneer Grover Exit?

Hey there,

PhonePe, GPay & PayTM dominate UPI payments with a 97% market share.

Meanwhile, $3Bn BharatPe struggled after founder Ashneer Grover's exit last year.

But with a recent EBITDA profitable month, BharatPe seems to be coming back.

Here’s how 👇

1. Merchant-First Approach in a consumer-first World:

Unlike many fintechs that focus on consumers first, BharatPe plays a different game. It targets merchants, earning through payments, loans, and soundboxes. CFO Nalin Negi believes this merchant-first strategy is key to outperforming competitors.

2. BharatPe Money for Lending Services:

Lending is a lucrative segment in fintech, and BharatPe knows this well. So, BharatPe wants to consolidate its various lending services, including consumer loans with PostPe, P2P lending with 12% Club, NBFC lending with Trillion Loans, and a joint venture with Centrum for a small finance bank.

In October alone, their lending vertical saw loans exceeding INR 640 Cr, a 36% increase YoY. This move positions them strongly against competitors like Paytm, which disbursed loans worth INR 3,275 Cr in Q2 FY24.

3. Big Ambitions to Become a SuperApp:

BharatPe aims to control the entire value chain. They offer lending services, a small bank, BNPL, payment services, and soundboxes.

They're also on the verge of obtaining an online payment aggregator license, potentially becoming the second company after PayTM to hold both online and offline payment aggregator licenses.

BharatPe seems to be on the right track. Yet, challenges remain. They need to reduce their 5000Cr losses, find a new CEO, manage their subsidiaries, and handle the 81Cr embezzlement case with Ashneer.

The company's ability to address these issues will be key in determining its sustainability and potential for future growth.

✍️ Jargon of the day

EBITDA - EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It reflects a company's operating profits before accounting for common big expenses like interest payments, taxes owed, or gradual wear and tear costs.

For BharatPe, becoming EBITDA profitable recently indicates its core business of facilitating merchant payments and providing working capital loans has reached a point where operational revenue now exceeds the direct costs of providing these services. This is a major milestone after years of heavy losses.

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Cheers,
Karthik