Startup Deep Dive : Veritas Finance — profitable since day one, this Chennai NBFC is now headed for an IPO

Veritas Finance has never posted an annual loss in the decade since it started lending to shopkeepers, mechanics and small manufacturers who cannot produce a salary slip or an income-tax return. That is an unusual claim for a startup-era NBFC to make, and it is one the company itself makes in its own investor material. By 31 March 2026 the same lender had ₹9,134 crore ($951 million) of loans under management, according to its refiled draft red herring prospectus (DRHP) with SEBI, and had picked up a unicorn valuation along the way.

The contradiction is worth sitting with. Lending to India’s informal, undocumented small-business owner is exactly the segment banks avoid, because there is no credit bureau history and no audited balance sheet to underwrite against. Veritas built its entire model around that gap, scaled it from a ₹13.6 crore starting corpus in Chennai to a company preparing for a stock exchange listing, and did it while surviving demonetisation and a pandemic moratorium. This piece traces how, with the numbers on both sides of every claim.

Quick facts

What they do

Veritas Finance is a Chennai-headquartered, non-deposit-taking NBFC, registered with the Reserve Bank of India and classified as an NBFC-Middle Layer under the RBI’s scale-based regulation. It lends small-ticket, largely secured loans to micro, small and medium enterprises and self-employed individuals in rural and semi-urban India, most of whom have thin or no formal credit history. Its four product lines, as detailed in its refiled DRHP, are rural business loans (working capital and expansion finance for small traders and manufacturers), affordable home loans for self-construction or purchase in tier-I and tier-II towns, used commercial vehicle loans for rural transport operators, and short-tenure unsecured working-capital loans for shopkeepers. As of the July 2026 DRHP refiling, it ran 444 branches across 10 states and one union territory, with Tamil Nadu, Andhra Pradesh, Telangana, Karnataka and West Bengal as its core markets.

The origin

D Arulmany did not come to small-business lending as an outsider. He spent more than 11 years at Cholamandalam Investment and Finance’s DBS-backed unit, CholaDBS, where he ran the light commercial vehicle and three-wheeler financing business and built out a captive direct-selling-agent and franchisee network that took the company into more than 300 small towns. From 2010 to 2014 he was President and CEO of Aptus Value Housing Finance, joining when it was still an idea and helping build it into a serious affordable-housing lender. A BBA from Madurai Kamaraj University and a postgraduate diploma in rural management from the Institute of Rural Management Anand (IRMA) sat underneath both jobs, and it was the rural-management training, according to his own company biography, that pushed him toward the underserved end of the credit market. He incorporated Veritas Finance in 2015 and had it registered as an NBFC with the RBI that October, with an initial capital base of ₹13.6 crore, betting that the same disciplined branch-and-franchise model he had used for vehicles and homes could be built for MSME working-capital loans from scratch.

The struggle years

Veritas launched its lending operations in October 2015, a little over a year before the November 2016 demonetisation of high-value currency notes tore through India’s cash-dependent informal economy — precisely the customer base the company had just started underwriting. Collections and disbursements in cash-heavy rural markets were disrupted at a company that had barely completed a year of operations; its own FY2016-17 annual report frames the disruption as a forcing function toward digitisation rather than dwelling on the damage, but the timing left it with almost no cushion to absorb a shock. It kept lending through it, reporting monthly disbursements of more than ₹20 crore and borrowings of nearly ₹100 crore from over ten lenders inside its first year, according to company disclosures.

The second and more serious stress came four years later. When the RBI’s COVID-19 loan moratorium (March–August 2020) ended, collection stress in Veritas’s rural, self-employed borrower base showed up quickly: overdue accounts of 0 days past due or more peaked at 14.54% by 30 November 2020, per the company’s CARE Ratings rating rationale. Slippage into non-performing accounts rose to 5.35% in FY21 from 3.78% in FY20, and gross and net Stage III assets moved to 2.70% and 1.38% as of 31 March 2021, from 1.86% and 1.29% a year earlier, with the company writing off ₹23.28 crore during FY21 to keep the headline ratios contained. Business India’s later reporting on the company notes that Veritas came out of the pandemic having introduced a risk-based pricing model and, despite the “higher credit cost reported on account of COVID-19-induced pandemic,” kept improving its profitability metrics through the two pandemic years rather than after them.

The turning point

At launch, Veritas set itself an internal target of ₹1,000 crore in loan assets within 1,000 days. It did not hit that literally: by Business India’s account, the company reached the ₹1,000 crore AUM mark in roughly four years of operations rather than 1,000 days, and it treats that milestone — not the exact timing — as the end of its early-stage validation phase. What changed on the other side of it was who was willing to fund the company. Through 2016 to 2018, Veritas had raised money almost entirely from impact-oriented investors — Lok Capital, Caspian, CDC Group (now British International Investment), Incofin and BlueOrchard — in rounds of ₹30 crore, ₹120 crore and ₹55 crore. Once the loan book crossed the ₹1,000 crore mark and reached ₹1,308 crore by February 2020 across 201 branches and 48,638 customers, mainstream growth-equity investors arrived: Kedaara Capital led a ₹350 crore Series E in 2020, and Kedaara and Norwest Venture Partners co-led a ₹440 crore round in October 2021 at ₹185 crore apiece. The AUM growth accelerated sharply afterward, hitting a 61.76% compound annual growth rate between FY22 and FY24, according to CARE Ratings data cited by Business India — the clearest sign that the pre-2020 validation phase had done its job.

The money behind it

Veritas has raised money in roughly a dozen rounds since 2016, moving from impact-investment backers to large growth-equity funds as it scaled, then into pre-IPO territory. Its cumulative equity funding since inception stood at about ₹1,835 crore as of September 2025, per ScanX’s corporate-actions tracker.

• 2016, Series A: ₹30 crore from Lok Capital and Caspian Impact Investment Advisers (Business Standard, 2016).
• December 2017, Series B: ₹120 crore from Lok Capital and CDC Group, the UK development-finance institution now known as British International Investment (Entrackr, April 2018).
• April 2018, debt round: ₹55 crore from Incofin Investment Management and BlueOrchard (Entrackr, April 2018).
• 2020, Series E: ₹350 crore led by Kedaara Capital, alongside Norwest Venture Partners, Lok Capital Growth Fund and the family office of P Surendra Pai (Inc42, October 2021).
• October 2021: ₹440 crore co-led by Norwest Venture Partners and Kedaara Capital (₹185 crore each), with Growth Catalyst Partners, Evolvence India Fund and Caspian Impact Investment also participating (Inc42; DealStreetAsia, October 2021).
• July 2023: a ₹1,200 crore round — ₹1,050 crore from Multiples Private Equity and the International Finance Corporation (₹400 crore of it primary, the rest a partial exit for early backers BII and Lok Capital), plus ₹150 crore from Avendus Future Leaders Fund (Business Standard, July 2023).

Kedaara Capital and Norwest Venture Partners changed the company’s trajectory the most: both entered once the MSME-lending model had already been de-risked by five years of operating history, and both stayed on through the IPO process, together holding more than 36% of the company as per the July 2026 refiled DRHP (AngelOne). Its reported valuation has since been pegged at $1 billion by ScanX’s unicorn tracker (16 September 2025) and at a higher $1.5 billion by Tracxn’s company profile for the same period — the two trackers disagree, and Veritas itself has not confirmed either figure publicly, so both are given here as reported.

How it makes money

Veritas earns interest income on loans it originates and holds largely on its own book, funded by a mix of bank borrowings, non-convertible debentures (rated CARE AA-) and equity. The mechanics:

• Ticket sizes are deliberately small: rural business loans average about ₹4.7 lakh, affordable home loans about ₹11.3 lakh, used commercial vehicle loans about ₹4.5 lakh, and working-capital loans about ₹1.8 lakh (Business India, September 2025).
• Underwriting is cash-flow-based, not documentation-based: the company uses a proprietary model it calls the “triple AAA filter,” assessing a borrower’s cash-flow pattern, business stability and repayment ability rather than relying on payslips or tax filings — the part most outsiders assume an NBFC of this kind cannot do reliably.
• The book is mostly secured: about 90% of the portfolio carries collateral, chiefly property, which caps loss-given-default even when a borrower has no formal income proof (Business India).
• Distribution is a hub-and-spoke branch network in semi-urban and rural markets, not a digital-only or DSA-heavy model, which keeps origination and collection costs predictable but caps how fast new geographies can be added.
• Margin sits in the gap between the cost of borrowed funds and the yield on higher-risk small-ticket loans, offset by credit costs that spike in shocks (as in FY21) and compress in normal years — profit after tax rose from ₹245.1 crore in FY24 to ₹330.4 crore in FY26, even as gearing stayed a moderate ~2.1 times net worth (Business India; company financials).

The numbers

Veritas has reported profit after tax in every year for which figures are available, with revenue and profit both compounding faster than the broader NBFC-MSME sector through FY24–FY26.

*Veritas’s FY26 total income was not separately broken out in the sources reviewed for this piece; its net interest income for FY26 was ₹1,133.5 crore, an 18% rise over FY25, per its refiled DRHP (AngelOne, 2026). Total-income and PAT figures for FY24 and FY25 are drawn from Veritas’s own annual report data (WWIPL financial summary, accessed September 2026); FY26 figures are from the company’s July 2026 DRHP refiling.

• FY24 profit before tax: ₹322.96 crore, rising to ₹388.32 crore in FY25 (company annual report data via WWIPL).
• Loans under management growth: from ₹1,308 crore (February 2020) to ₹6,517.2 crore (30 September 2024) to ₹9,134.2 crore (31 March 2026) — a scale-up of roughly seven times in six years.
• Tangible net worth: ₹2,279 crore (March 2024) rising to ₹2,710 crore (March 2025), against gearing of about 2.1 times (Business India, September 2025).

Where the money comes from

Veritas is not a diversified lender by product; it is concentrated by design in one segment and expanding cautiously outward from it.

• Rural business loans dominate the book: they made up over 72% of the company’s ₹6,517 crore AUM as of its January 2025 DRHP disclosures, with home loans, used commercial vehicle loans and working-capital loans splitting the remainder.
• Geography is heavily south-India-weighted: Tamil Nadu, Andhra Pradesh, Telangana and Karnataka are named as core markets in its 2026 DRHP refiling, with West Bengal as its main expansion market outside the south.
• Branch count has been volatile in the numbers available: Business India cites 424 branches as of September 2024; ScanX cites 494 branches across 11 states around September 2025; the July 2026 DRHP refiling states 444 branches across 10 states and one union territory. The company has not publicly explained the dip between the September 2025 and July 2026 figures, which may reflect branch consolidation or a difference in what each source counts as an active branch.
• The surprise is how little the model has drifted: despite a decade of scaling and three PE-led capital infusions, Veritas has stayed a secured, rural, south-India MSME lender rather than diversifying into unsecured retail or digital-only lending, the route several better-funded fintech NBFCs took over the same period.

The risks

• Geographic and segment concentration: a large majority of the loan book sits in Tamil Nadu, Andhra Pradesh, Telangana and Karnataka, and over 72% of AUM is in one product line (rural business loans, per the January 2025 DRHP). A regional agricultural or economic shock in the south would hit collections disproportionately, with no offsetting geography.
• Underwriting risk in an undocumented borrower base: the “triple AAA” cash-flow model that lets Veritas lend to borrowers without payslips or tax returns is also its single point of failure — if it misjudges informal income patterns at scale, asset quality can move quickly, as it did in FY21, when slippage rose to 5.35% from 3.78% a year earlier (CARE Ratings rating rationale). Gross NPA stood at 2.21% and net NPA at 1.10% as of 31 March 2025 (Business India), a reasonable base that a repeat shock could still move meaningfully given the borrower profile.
• Funding and interest-rate risk: Veritas runs gearing of about 2.1 times net worth and depends on bank borrowings and rated NCDs to fund a book of small, dispersed loans. A rise in the cost of wholesale funds that cannot be passed through to borrowers as quickly would compress the interest margin the entire model depends on.

The takeaway

The lesson in Veritas Finance’s decade is not that lending to the informal economy is safe — the FY21 slippage numbers show it is not. It is that the segment can be underwritten profitably if the underwriting method is built for the borrower rather than adapted from a bank’s documentation-first checklist, and if the company is disciplined enough to stay concentrated in what it actually understands before chasing scale in adjacent markets. Veritas resisted diversifying into unsecured digital lending even after growth-equity money made that option easy to fund; it added housing and vehicle loans only once its core MSME book had proven itself for years. That sequencing, more than any single funding round, is why a Chennai NBFC nobody outside credit-rating circles had heard of a decade ago is now the one filing IPO papers.

Frequently asked questions

What does Veritas Finance do?

It is a Chennai-headquartered NBFC that lends to micro, small and medium enterprises and self-employed individuals in rural and semi-urban India, mostly through secured rural business loans, alongside affordable home loans, used commercial vehicle loans and working-capital loans.

Who founded Veritas Finance and when?

D Arulmany, a financial-services executive who had previously run vehicle financing at Cholamandalam’s CholaDBS unit and led Aptus Value Housing Finance as President and CEO, incorporated Veritas Finance in 2015; it was registered as an NBFC with the RBI that October.

Who are Veritas Finance’s major investors?

As of its July 2026 DRHP refiling, its largest shareholders are Norwest Venture Partners (21.58%), Kedaara Capital Fund (15.08%), British International Investment (10.33%) and Lok Capital (9.48%), alongside Multiples Private Equity, the International Finance Corporation and Avendus Future Leaders Fund from later rounds.

Is Veritas Finance profitable, and what is it worth?

Yes — it reported profit after tax of ₹245.1 crore in FY24, ₹295.1 crore in FY25 and ₹330.4 crore in FY26. Its valuation has been reported at $1 billion (ScanX, September 2025) to $1.5 billion (Tracxn, September 2025); the company has not confirmed either figure.

What is the status of Veritas Finance’s IPO?

Veritas first filed a DRHP with SEBI in January 2025 for a roughly ₹2,800 crore offering, then refiled on 30 July 2026 with a ₹900 crore fresh issue and an offer for sale of up to 1.28 crore shares, with ICICI Securities, IIFL Capital Services, JM Financial and SBI Capital Markets as lead managers for a planned BSE and NSE listing.

Sources

Figures are as of September 2026. Currency converted at $1 ≈ ₹96.0 as of 18 September 2026 (Trading Economics).

• Business India, “Banking on the unbanked” (accessed September 2026)
• Inc42, “Exclusive: Veritas Finance To Raise INR 440 Cr From Norwest Venture, Kedaara Capital” (October 2021)
• DealStreetAsia, “MSME focused lender Veritas Finance raises funding led by Norwest, Kedaara Capital” (October 2021)
• Entrackr, “MSME-focused NBFC startup Veritas secures Rs 55 Cr debt round” (April 2018)
• Business Standard, “Veritas Finance raises Rs 30 crore in Series A funding” (2016)
• Business Standard, “Multiple Private Equity, IFC to invest Rs 1,050 crore in Veritas Finance” (July 2023)
• Business Standard, “Upcoming IPO! Veritas Finance files DRHP for Rs 2,800-cr offering with Sebi” (January 2025)
• Business Today, “Veritas Finance files DRHP with SEBI to launch IPO; check details” (30 July 2026)
• AngelOne, “Veritas Finance IPO: Company Refiles DRHP with SEBI, Increases Fresh Issue to ₹900 Crore” (2026)
• ScanX, “Veritas Finance Achieves Unicorn Status with $1 Billion Valuation” (16 September 2025)
• Tracxn, Veritas company funding and valuation profile (accessed September 2026)
• WWIPL, Veritas Finance unlisted-shares financial summary, based on company annual reports (accessed September 2026)
• CARE Ratings, rating rationale for Veritas Finance, via veritasfin.in credit ratings page (accessed September 2026)
• Veritas Finance official website, founder biography, veritasfin.in/founder.php (accessed September 2026)

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