Over the past couple of years, various digital investment platforms like Zerodha, Groww, Upstox, and others experienced a significant increase in their user bases, primarily driven by the stay-at-home norms during the Covid period. Apart from the stock markets, investments in digital gold also witnessed a resurgence. This trend is evident in Safegold’s outstanding financial performance in FY23.
According to Safegold’s consolidated financial statements filed with the Register of Companies, its gross revenue surged by 81.8% to Rs 4,498 crore in FY23 from Rs 2,474 crore in FY22.
Safegold is a digital platform that enables customers to easily buy, sell, and securely receive vaulted gold, even in small amounts. The company generates revenue solely from the sale of digital gold through online and offline channels.
A noteworthy aspect is that 79.2% of Safegold’s transactions are wholesale, with the remaining falling under retail trade.
For the digital gold platform, the cost of procurement and related items accounted for 99.1% of the overall expenditure, which increased by 99.1% to Rs 4,459 crore in FY23 from Rs 2,443 crore in FY22. Other expenses such as employee benefits, legal/professional fees, advertising, distribution, and overheads contributed to the total cost rising to Rs 4,500 crore in FY23 from Rs 2,475 crore in FY22.
Despite the substantial year-on-year growth and controlled expenses, Safegold managed to achieve a profit of Rs 11 crore in FY23 compared to a loss of Rs 1 crore in FY22. Its return on capital employed (ROCE) and earnings before interest, taxes, depreciation, and amortization (EBITDA) margin were 46% and 0.2%, respectively. On a unit level, the company spent Rs 1 to earn a rupee in FY23.
Safegold is backed by investors such as Pravega Ventures, Beenext, a Singapore angel network, and individuals like Rajan Anandan, Roshan Angrish, Prashant Malik, and Niraj Shah.
While Safegold has shown impressive growth in a competitive industry like gold trading, it faces the challenge of maintaining profitability with slim margins, especially as volumes increase. However, with the gold market remaining bullish, Safegold remains a company worth monitoring.
