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The Story Behind Ugro Capital Limited

Stock Data
ExchangeNSE and BSE
Price Performance
Last 1 Month+12.31%
Last 12 Months+71.63%

“Our belief is that like consumer credit business in India, the small business financing is also rapidly embracing data driven underwriting. Since the start of demonetisation and advent of GST and creation of three layers of India data stack is ensuring that in the next two to three years, the entire SME credit space would move to a data driven underwriting.“

– Shachindra Nath, Vice Chairman & Managing Director

Equity Price Performance:

Equity Prices rallied over the past month.

  • The firm announced that it has made an allotment of Market Linked Non – Convertible Debentures.
  • The firm announced the appointment of Kishore Lodha as CFO effective from September 15, 2022.


The Reserve Bank of India seeks to provide the MSME Sector in India greater  access to  formal credit. To ensure the flow of formal credit to the MSME sector, RBI came up with the Co – Lending model. This particular model allows NBFCs to enter into an arrangement with Banks to ‘co – lend’ with a 80% – 20% ratio on loan exposures, where the NBFCs could provide 20% of the loan and the Bank could provide 80% of the loan. This allows the NBFCs to collect the ROI on 20% of the loans as well as the differential between the bank rate and the ROI as a fee on the remaining 80% of the loans.  

Ugro Capital Limited has utilised the Co – Lending model in their operations. The introduction of the Co – Lending model allows Ugro to expand their operations at a higher ROE than traditional lending models.

As the Co – Lending Model is a value accretive strategy, the ROE increases as the Co – Lending loans proportion rises. On that note, Ugro Capital Limited has seen an impressive rise in its Off Book AUM. The firm has partnered with major banks like Bank of Baroda, SBI, IDBI Bank, Central Bank of India, Punjab & Sind Bank, Indian Overseas Bank and four other SFBs and NBFCs. Additionally, Ugro is also engaging with 18 other major financial institutions that might lead to Co – Lending agreements. 


Ugro Capital carried out an 18 months process involving an extensive study of various micro and macro parameters with CRISIL to identify 9 sectors to target that would provide a high asset quality.

Ugro Capital has created a data driven underwriting model that incorporates an identity layer and a payment layer. So, Ugro utilises a machine learning model that analyses banking behaviour and the cash flow of the business to extract data features which can be used to correlate with the portfolio performance. Ugro Capital also intends to incorporate GST data in its model by Q3FY23 to produce a powerful tool that can be used to create a benchmark for the company’s underwriting process. The model, namely the GRO Score model, sorts customers in five grades (A to E) according to the risk associated with lending to them. The lender also produces a secondary scorecard for the particular sector that incorporates sector specific parameters. The lender focuses mainly on lending to the better grade customers (A&B).


The overall payment received over several time periods is the most optimal way to assess the quality of a lender’s underwriting process. Ugro Capital’s overall collection trend is a testament to their high quality underwriting process.

As Ugro Capital’s overall collection efficiency trend revolves around 93% – 94%.

Financial Performance:

The Asset Under Management stands at about ₹ 3,656 crores and the off book AUM is at 21%. The net total income is at a robust level of 10.5%. Credit Cost (amount set for bad loans) stays at a meagre level of 1.4%. The management believes that they are on track to reach their estimated projections of ₹ 7,000 crores AUM, 35% off book AUM and ROA higher than 2%.

Estimated Projections by the Firm

AUM (₹ Cr.)2,9693,6567,000+20,000+
Off Book AUM %16%21%35%+50%
Net Total Income %9.3%10.5%13%15%
Cost to Income Ratio %71.8%72%60%45%
Credit Cost %1.5%1.4%1.5%1.5%
ROTA % (Avg.)0.6%1%2%4.5%
ROE % (Avg.)1.5%3%6% – 8%18%

Revenue for Q1 FY23 increased by 141% YoY to ₹ 123.8 crores. Profits have grown by 330% YoY to ₹ 7.34 crores. Interest Income Segment Revenue rose to ₹ 93.1 crores for Q1 FY 2023. Total Expenses rose by 132% YoY to ₹ 113.42 crores in Q1FY23. Total branches have reached an impressive count of 96. In this quarter’s investor presentation, showed that the CRAR of 28% was a testament to the company’s credit solvency. 

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