UGRO Capital Secures Top Rating, Accelerates Growth

UGRO Capital, a leading DataTech NBFC focused on MSME lending, has achieved a significant milestone by securing the highest rating of ‘IND A1+’ for its short-term Commercial Papers (CPs) from India Ratings and Research (Ind-Ra). This top-tier rating underscores the company’s robust financial performance, strategic acumen, and consistent growth trajectory.

In addition to the CP rating, Ind-Ra has upgraded UGRO’s Non-convertible debentures (NCDs), Bank loans, and Sub-debt to ‘IND A+’ with a Stable outlook. These upgrades reflect UGRO’s rapid expansion, diversified funding mix, healthy capital buffers, and comprehensive product offerings tailored to the MSME segment.

UGRO has demonstrated impressive growth, with its Asset Under Management (AUM) surging from ₹13.2 billion in FY21 to ₹90.4 billion by the end of FY24. This remarkable expansion was fueled by a significant increase in its off-book portfolio and a robust 56% CAGR in on-book AUM.

The company’s strategic focus on partnerships, both with public sector banks and fintechs, has been instrumental in its growth. UGRO has forged 12 co-lending and co-origination partnerships and expanded its branch network to over 150, with plans to reach 250.

UGRO’s strong financial position is evident in its successful capital-raising efforts, with equity infusions totalling ₹12.7 billion in Q4 FY24 and additional capital raised in Q1 FY25. The company boasts a robust capital adequacy ratio of 20.75% and a steady leverage ratio of 3.2x.

With a diversified loan portfolio, including property-secured loans, machinery financing, retailer financing, and business loans, UGRO is well-positioned to capitalise on the MSME market. The company’s strategic shift towards high-yielding products and increased emphasis on micro-loans are expected to drive profitability and margins.

UGRO’s investment in technology and data analytics, coupled with the acquisition of MyShubhLife, positions the company for sustained growth in the high-yielding retailer financing segment. The company’s diversified funding mix and strong liquidity position further solidify its financial stability.

Mr. Shachindra Nath, Founder and Managing Director of UGRO Capital, expressed his enthusiasm about the rating upgrade, stating, “We are thrilled to receive the highest rating of ‘IND A+’ from India Ratings and Research. This upgrade is a testament to our strategic vision, robust financial performance, and unwavering commitment to our belief since inception – that MSME Accha Hai. India’s MSMEs need affordable cost of borrowing. UGRO’s ability to lend at affordable rates is a function of its own cost of borrowing. Hopefully, lenders would take notice of this upgrade and our cost of borrowing would come down over a period of time with this rating upgrade.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.