Kinara Capital's Fall From Profits, Infra.Market Goes Shopping & More

Kinara Capital’s Fall From Profits

Kinara Capital is in a fix. For the first time in a decade, the Bengaluru-based NBFC incurred a loss in FY25, and credit rating agencies have downgraded the company amid concerns over its financial stability. So, how exactly did Kinara reach this tipping point?

From Profits To Peril: Kinara’s bleak predicament is partly due to a rise in bad loans, difficulties in recovering unsecured loans, higher credit costs, and a decline in assets under management (AUM).

Then, there were headwinds such as regulatory crackdown, macroeconomic conditions, sector-specific stress and increased customer overleveraging. This resulted in Kinara recording a net loss of INR 351 Cr in FY25 against a profit of INR 62 Cr in FY24.

The Making Of A Crisis: Kinara’s loss-making FY25 was a result of a multitude of factors, which have been bubbling for some years now:

• First, mounting write-offs for the last few years (INR 341 Cr in FY25, INR 123 Cr in FY24 and INR 74 Cr in FY23)
• Kinara’s cost on credit shot up to 14.5% in FY25 from 7.1% in the previous year
• A 9.6% YoY decline in AUM to INR 2,841 Cr in FY25, as it took a more cautious approach in disbursing credit to rein in piling bad loans

Lenders Loom Heavily: As profitability falters, creditors are breathing down the company’s neck. In the “continued breach” of 91.07% of financial covenants, pertaining to borrowings totalling INR 1,850 Cr, the company will have to repay this amount whenever lenders demand.

Despite the management’s efforts, waivers have been secured for only 4% of the impacted debt, leaving a substantial 87% of the borrowings in breach without lender forbearance. Failure to score further waivers could exert significant pressure on the liquidity profile and overall financial stability of the NBFC.

With investors hesitant and the prospect of raising INR 200 Cr to INR 300 Cr bleak, here’s how Kinara Capital’s story is unfolding.

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