10.4 Sensitivity analysis
Using Scenario B (₹100 Cr total AUM) as the base.
Sensitivity to credit cost (NPA / ECL)
Section titled “Sensitivity to credit cost (NPA / ECL)”| Credit cost | Pre-tax profit | Change vs base |
|---|---|---|
1.5% | ~₹3.5 Cr | +47% |
2.5% (base) | ₹2.38 Cr | base |
3.5% | ~₹1.3 Cr | -45% |
5.0% | ~−₹0.3 Cr | break-even |
7.5% | ~−₹2.8 Cr | severe loss |
Take: every 100 bps of credit cost = ~₹1 Cr of pre-tax profit (own share dominant). Credit discipline is the single biggest lever.
Sensitivity to processing fee
Section titled “Sensitivity to processing fee”| Processing fee (per disbursal) | Annual fee revenue | Pre-tax profit | Change vs base |
|---|---|---|---|
1.0% (own and partner) | ₹4.0 Cr | ~₹1.4 Cr | -41% |
1.5% own / 1.0% partner (base) | ₹4.6 Cr | ₹2.38 Cr | base |
2.0% own / 1.5% partner | ₹6.6 Cr | ~₹4.3 Cr | +81% |
Take: processing fee is hugely amplified by tenure-annualisation. Even 50 bps movement is material. But raising fees risks borrower attrition; manage carefully.
Sensitivity to cost of funds
Section titled “Sensitivity to cost of funds”| Cost of funds | Pre-tax profit |
|---|---|
10.0% | ~₹2.9 Cr |
12.5% (base) | ₹2.38 Cr |
15.0% | ~₹1.9 Cr |
Take: cost-of-funds matters but is structurally bounded by who lends to NBFCs. Cheaper funds come from operating track record + ratings + capital.
Sensitivity to operating cost
Section titled “Sensitivity to operating cost”| Op cost (% of book) | Pre-tax profit |
|---|---|
2.5% | ~₹3.2 Cr |
3.3% (base) | ₹2.38 Cr |
4.5% | ~₹1.3 Cr |
Take: operating efficiency from automation and CA-channel distribution is a major lever. Manual / DSA-heavy operations push toward 4.5%.
Sensitivity to repeat-borrower rate
Section titled “Sensitivity to repeat-borrower rate”Repeat borrowers have:
- Lower acquisition cost (assumed
~₹500vs₹3000for new). - Lower credit cost (
~50%lower default rate based on internal performance). - Higher LTV (multiple cycles).
| Repeat rate | Effective annualised CAC | Effective credit cost | Pre-tax profit |
|---|---|---|---|
20% | high | 2.5% | ~₹2.0 Cr |
40% (base) | medium | 2.3% | ₹2.4 Cr |
60% | low | 2.0% | ~₹3.1 Cr |
Take: repeat-rate is the strongest profitability driver after credit cost. Channel design (CA / embedded / repeat product surfaces) directly shapes it.
Sensitivity to scale
Section titled “Sensitivity to scale”Holding cost-income ratio assumptions at scale-appropriate levels:
| Total AUM | Cost-income ratio | Pre-tax profit |
|---|---|---|
₹30 Cr (A) | 67% | ₹2.3 Cr |
₹100 Cr (B) | 78% | ₹2.4 Cr |
₹200 Cr | 73% | ~₹3.7 Cr |
₹330 Cr (C) | 68% | ₹5.1 Cr |
₹500 Cr | 65% | ~₹7.5 Cr |
₹1,000 Cr | 60% | ~₹15 – 18 Cr |
Take: real operating leverage kicks in past ₹200 Cr blended AUM. The middle (B) is the awkward stage.
Break-even AUM
Section titled “Break-even AUM”Approximate break-even at the fixed-cost level (engineering + compliance + InfoSec + key roles):
- Fixed annual cost at MVP:
~₹4 – 5 Cr. - Variable contribution margin per
₹of book:~7 – 9%net of credit cost. - Break-even AUM:
~₹50 – 65 Cr.
At ~₹50 Cr total (own + co-lent), the platform is at operating break-even. Below that, losses. Above, scaling profits.
What breaks the model
Section titled “What breaks the model”- Credit cost above
5%sustained — losses every quarter. - Partner pull-back mid-year — book collapses, costs locked.
- Yield compression to
< 17%— competitive pressure erodes margin. - Operating cost above
5%sustained — overhead consumes margin. - Slow ramp —
12-monthbook ramp delayed to24— burn extends, equity exhausts.
What protects the model
Section titled “What protects the model”- Repeat-borrower strategy —
> 40%repeat by year 2. - CA / Tally / embedded distribution — low acquisition cost.
- Tight credit policy with frequent vintage review — credit cost
< 2.5%. - Two co-lending partners by year 2 — no single point of failure.
- Lean platform team with high automation — operating cost
< 3.5%.