Hero Fincorp, led by Abhimanyu Munjal, has reported an 80% increase in loan write-offs during the first three quarters of FY25, as per the company’s filings. The total write-offs widened to ₹2,180.9 crore, compared to ₹1,214.7 crore during the same period in FY24. Notably, the non-banking financial company (NBFC) sold over 2.95 lakh written-off loans, worth ₹1,874.73 crore, for a mere ₹49.85 crore.  

 1. Assets Under Management and Loan Portfolio  
As of September 30, 2024, Hero Fincorp’s assets under management (AUM) stood at ₹53,642 crore, according to a report by ICRA. The portfolio comprises personal loans (30.7%), two-wheeler financing (16.9%), secured MSME loans (12.9%), unsecured MSME loans (11.2%), corporate loans (9.7%), pre-owned car finance (7.3%), home loans (6.7%), and loans against property and other products (4.7%).  

 2. Gross NPAs and Rising Slippages  
Despite previous efforts to reduce bad loans, the company’s gross non-performing assets (NPAs) have shown an upward trend. After peaking at 7.9% in FY22 due to the pandemic-induced economic slowdown, the gross NPA ratio was reduced to 5.38% in FY23 and further to 4.26% in the following year. However, by December 31, 2024, the gross NPA ratio climbed back to 5.36%, indicating fresh slippages in recent quarters.  

 3. Impact on Profitability  
The rising bad loans and write-offs have significantly affected Hero Fincorp’s profitability. For the nine-month period ending December 31, 2024, the company’s profit after tax dropped by over 57% to ₹299.35 crore compared to the same period a year earlier.  

 4. Awaiting SEBI Approval for IPO  
The surge in bad loans comes at a critical time for Hero Fincorp, as it awaits approval from the Securities and Exchange Board of India (SEBI) for its initial public offering (IPO). The IPO, filed on July 31, 2024, aims to raise ₹3,668 crore, including ₹2,100 crore through a primary issuance. These funds are intended to strengthen the company’s Tier-I capital base for future lending needs.  

 5. Diversified Financial Services Provider  
Established in December 1991 as Hero Honda FinLease Ltd, Hero Fincorp has evolved into a diversified financial services company. It offers a wide range of products, including two-wheeler financing, affordable housing loans, educational loans, and financial support for small and medium-sized enterprises (SMEs).  

 6. Awaiting Company Response  
An email seeking comments from Hero Fincorp remained unanswered at the time of publishing. Updates will be provided once the company issues a response.  

This development highlights the challenges faced by Hero Fincorp as it navigates increasing bad loans, declining profitability, and preparations for its public market debut.