Fibe’s IPO papers flag reliance on unsecured, repeat lending
Bengaluru: Mumbai-based Fibe filed for an initial public offering on Tuesday, pooling up to 100,000 new issues. ₹750 crore with offer for sale of over 40 million shares by existing investors.
Fibe is a digital consumer lender that uses its app and partner channels to offer mostly unsecured personal loans and other credit products to salaried, middle-income customers.
The draft red herring prospectus (DRHP) stated that the company is heavily dependent on unsecured personal loans, recurring borrowings from existing customers and its significant subsidiary EarlySalary Services Pvt. Ltd, which does the actual lending and carries all borrowings on the balance sheet.
DRHP also shows large default loss guarantee payments, indicating that the business is not just a fee-driven fintech but also a lender exposed to credit cycles and financing costs.
The Pune-based company, which says it has no identifiable backer, is backed by investors including TPG’s Rise Fund, Norwest, Eight Roads, Piramal Finance and Chiratae-linked vehicles.
New customers carry higher risk
Fibe says 38.53% of personal loan payments in FY26, 33.45% in FY25 and 29.23% in FY24 were made to new customers, and warns that this “involves exposure to higher credit risk.”
New borrowers have no internal repayment history, so the company funds them largely based on external data, income verification and model-based scoring rather than behavior observed within Fibe itself.
The company says any adverse developments affecting such customers could lead to higher defaults, which “could adversely affect our business, results of operations, financial condition and cash flows.”
It is a recurring lending center
Fibe also invests heavily in repeat borrowers. At DRHP, it noted that it had secured recurring loans from 83.92% and 90.7% of its existing eligible customers in FY25 and FY24, respectively, and warned that any reduction in such borrowing behavior could hurt growth and revenue.
DRHP shows 687,889 existing customers took out recurring loans in FY26, compared to 570,457 customers in FY24. Personal loan amount extended to existing customers ₹7,994.96 crore in FY26 ₹5,909.18 crore in FY24. The share of existing customers as a share of eligible borrowers was 73.89% in FY26 and 90.70% in FY24, indicating a decline in the permanent user base.
The company said it helps reduce acquisition costs and turnaround times for existing borrowers because they already have their own data and relationship history, making repeat lending more efficient than chasing new customers.
“A decrease in repeat rates could increase our reliance on new customer acquisition, which could potentially lead to higher acquisition costs, longer customer acquisition cycles and lower operating efficiency, which could adversely affect our business, results of operations, financial condition and cash flows,” he said.
Balance sheet and asset quality
Fibe’s recorded loan book in the balance sheet was as follows: ₹5,241.2 crore as on March 31, 2026, whereas ₹3,213.78 crore a year ago and ₹2,287.16 crore in FY24. The company says 99.39% of total gross loans as of March 31, 2026 were unsecured, so underwriting risk remains high even as scale improves.
There is a secured lending presence but it is very small. Secured loans constituted 0.61% of the book in FY26; ₹5.28 crore. DRHP says the majority of clients are middle-income individuals with average monthly income ₹37,083.07, making the repayment sensitive to job stability and income fluctuation.
Default data shows some improvement in the headline stage 3 count. Gross Stage 3 Loans ₹63.13 crore in FY26 ₹93.17 crore in FY25, but higher than the figure in FY20 ₹44.62 crore in FY24. Gross Phase 3 as a share of total gross loans stood at 1.2% in FY26, 2.9% in FY25 and 1.95% in FY24.
Fibe reported generating revenue from its operations ₹1,584.55 crore in FY26 ₹1,208.94 crore in FY25 and ₹771.86 crore in FY24. The company announced net profit ₹257.46 crore in FY26 as against ₹113.73 crore in FY25 and ₹101.25 crore in FY24.
Fibe’s total expenses in FY26 were: ₹1,215.12 crore. The largest expense item was the impairment of financial instruments or the cost of credit. ₹420 crore or about 34.5% of total expenses.
FLDG risk and IPO use of funds
The biggest hidden risk in DRHP may be the default loss warranty book. A first loss default guarantee (FLDG) is a structure under which Fibe agrees to cover a portion of losses on loans originating or servicing on behalf of partner lenders if borrowers default above agreed thresholds.
In this regard, Fibe said that it may have to pay compensation to lenders for losses arising from lenders’ defaults and paid guarantees. ₹135.25 crore in FY26, ₹205.96 crore in FY25 and ₹41.20 crore in FY24.
This is particularly important because the RBI, under its June 2023 default loss guarantee, has capped the FLDG guarantee at 5% of the underlying loan portfolio and made it mandatory for lenders to claim such guarantees within 120 days of maturity. The RBI also requires lenders to recognize bad loans and make provision on them independently, without offsetting FLDG collateral.
Fibe has provided corporate guarantees as of March 31, 2026. ₹3,276.21 crore against loans taken by its key subsidiary EarlySalary Services. The corporate guarantee means Fibe has promised lenders that if the subsidiary cannot pay its debt, Fibe itself may have to step in and pay the dues.
“Although our corporate guarantees and sponsor support have not been exercised over the past three Fiscal Years, we cannot assure you that our Significant Subsidiary will always be able to meet its debt service obligations or that we will not be required to satisfy our obligations under these corporate guarantees,” the company said in its DRHP.
This means that an IPO is not just a growth capital raise; This is also a capital and debt management issue for a fintech lender, which still has a thick layer of credit and financing risk.
