Overview – Ugro Capital Limited Bond on Altifi

Details of the Corporate Bond:

• Name of the Issuer: Ugro Capital Limited
• Product: Senior unsecured NCD (regulated by SEBI)
• Yield: 11.00% p.a. XIRR
• Tenure: ~26 months
• Min. Investment: ~Rs 1,00,000
• Interest repayment: Monthly
• Principal repayment: Quarterly
• Rating: India Ratings 'A'

Key Highlights:

• Strong board and governance with 6 Independent directors and 4 nominee directors further supported by experienced senior management team
• Comfortable capitalization levels supported by equity raise of 340 crores in Q1 FY'24 through a mix of QIP and preferential allotment from the likes of SBI Life Insurance, SBI General Insurance, Go Digit Insurance, Investment Fund for Developing Countries (IFU) during Q1 FY'24 with Capital Adequacy ratio at 24.8% and Tangible Net worth of 1283 crore as of H1 FY'24
• Strong growth of 25% in the AUM with a book size of 7592 crore in Sep'23 up from 6081 crore in Mar'23 post doubling of the same in FY'23, largely supported by disbursements in off book
• Ugro is profitable since past 4 years albeit margins on the lower side, reported a PAT of Rs. 40 crore in FY'23 as against Rs. 15 crore in FY'22. During H1 FY'24 margins have improved as it reported a PAT of Rs. 54 crore

Overview:

UGRO (erstwhile Chokhani Securities Limited) was acquired in 2018 by Shachindra Nath (Vice Chairman and Managing Director). UGRO is a publicly listed entity on both the National Stock Exchange of India Limited and BSE Limited. UGRO focuses on lending to MSMEs by offering them multiple products with varying tenors and ticket sizes. The company operates through 104 branches across a wide geographic spread. The AUM of the entity (own and managed) stood at 7592 crore at H1 FY'24 with the off-book volumes constituting 45% of the overall AUM.

UGRO has an AUM of INR 7592 crore and tangible networth of INR 1283 crore as on Sep 30, 2023. Operations are spread across Maharashtra, Tamil Nadu, Telangana, Gujarat, Rajasthan, Karnataka, etc. totalling about 26 states with 104 branches. As of Sep'23, Maharashtra, Tamil Nadu and Telangana contributed around 42% of the portfolio.

Promoter/ Management:

Shachindra Nath (Vice Chairman and MD): Mr. Nath was a founding member of Religare. He joined Religare in 2000 and grew the company into an integrated financial services organization with over 9,000 people and presence across SME focused lending, Retail Broking, Life Insurance, Health Insurance, Mutual Fund, Global Capital Markets, Investment Banking and Global Asset Management. He became the Group Chief Executive Officer of Religare in 2010. He successfully led the IPO process for Religare in 2007 and established new businesses as well as created successful joint ventures and partnerships for the group.

J Sathiayan (CBO):He is a finance and banking professional who brings over two decades of experience in the domains of SME & Business Finance, Retail Liabilities and Assets, Third Party Products Distribution and other financial services at multiple levels in corporates of high disposition, to the company. As a Chief Business Officer, he is responsible for making UGRO come alive to various partners and customers. His past high profile roles include being the Vice President of ABN Amro Bank N.V. and being a director of Religare Finvest Limited.

Kishore Lodha (CFO): He is a qualified Chartered Accountant by profession. He brings with him 20+ years of experience and has been associated with organisations like Future Group and SREI Infrastructure. He has worked in Hinduja Leyland Finance where he worked as the Chief Financial Officer. He has held various offices in the finance domain ranging from managing accounting, taxation, financial controller, RBI Compliances and Treasury function. Kishore head’s the Finance and Treasury function.

Om Sharma (COO): Om has a track record of over 20 years with a blend of expertise and passion for harnessing technology to foster business growth. He joins from AU Small Finance Bank, where he served as the Chief Digital Officer, and aims to leverage his capabilities as an accomplished Strategy and Digital Transformation Leader to enhance UGRO’s standing in the MSME industry. Before his stint at AU Bank, he held pivotal technology and transformation positions at Digiflynt and Emirates NBD, demonstrating a knack for building businesses and products from the ground up.

Key Financials:

All figures in INR crore

The prominent lenders in UGRO are:

• State Bank Of India
• Canara Bank
• UCO Bank
• Indian Bank

• SIDBI
• Northern Arc Capital
• Piramal Capital
• Poonawalla Finance