Veritas Finance Limited IPO

Its business involves exposure to high credit risk, first-time borrowers in under-served households and businesses in India (with such loans constituting 24.72% of its Loans (AUM) as of September 30, 2024). These borrowers may be adversely affected by economic and other factors that affect their income-earning capacity. Such factors could lead to increased customer defaults which could adversely affect its business, financial condition, results of operations and cash flows.

Non-payment or defaults by its borrowers may lead to increased levels of Gross Carrying Amount - Loans - Stage 3 (which aggregated to Rs. 1,267.61 million, Rs. 1,025.97 million, Rs. 772.92 million and Rs. 861.43 million as of September 30, 2024, March 31, 2024, March 31, 2023 and March 31, 2022, respectively) and related provisioning and write-offs on its balance sheet, which could adversely affect the company business, financial condition, results of operations and cash flows.

The company requires substantial funds for its business (its total borrowings as of September 30, 2024 were Rs. 48,894.18 million) and any disruption in its sources of funds could adversely affect its business, financial condition, results of operations and cash flows.

The company is affected by volatility in interest rates for both its lending and treasury operations, which could cause the company net interest income and net interest margin to vary and adversely affect its business, financial condition, results of operations and cash flows.

Its Working Capital loans (constituting 8.83% of the company Loans (AUM) as of September 30, 2024) are unsecured and are susceptible to credit risks which may result in increased levels of Gross Carrying Amount - Loans - Stage 3, which could adversely affect its business, financial condition, results of operations and cash flows.

The company depends on the accuracy and completeness of information submitted by its borrowers. Any misrepresentation, fraud, errors in or incompleteness of such information could adversely affect the quality of its credit assessment and adversely affect the company asset quality, business, financial condition, results of operations and cash flows.

The company has recently expanded into affordable home loans and used commercial vehicle loans as new lines of business and if the company is unable to grow these new businesses successfully or develop new businesses to address changing borrower needs, its business, reputation, financial condition, results of operations and cash flows may be adversely affected.

An inability to recover outstanding amounts due under defaulted loans within its secured loan portfolio (aggregating to 91.17% of the company Loans (AUM) as of September 30, 2024) from the sale of collateral, in a timely manner or at all, could adversely affect its business, financial condition, results of operations and cash flows.

An inability to meet its obligations, including financial and other covenants under the company financing arrangements, could adversely affect its business, results of operations and cash flows.

The company operates in a highly regulated industry and changes in the applicable regulatory environment or its inability to comply with applicable regulations may adversely affect its business, financial condition, results of operations and cash flows.