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Acuite upgrades rating of U GRO Capital

Posted On: 2021-09-23 22:43:42 (Time Zone: IST)


U GRO Capital, an NSE & BSE listed, small business lending fintech platform, today announced that Acuite Ratings and Research has upgraded its rating outlook from 'Stable' to 'Positive'. The company's Rs.1100 crore bank loan and Rs. 450 crore non-convertible debentures (NCD) have been rated A / Positive. The agency has also reaffirmed Acuite A1 rating to the Commercial paper programme amounting to Rs. 100 crore.

The rating rational for the upgrade describes following:

In the past few months, U GRO Capital has seen significant momentum in loan disbursements, which was at Rs. 243 crore in August 2021, Rs.260 crore in July 2021 and Rs.193 crore in June 2021. The company has also commenced lending under the co-lending partnership with Bank of Baroda of Rs. 1000 crore since July 2021.

Underlying portfolio continues to be robust and resilient as evidenced from lower delinquencies of 8.9% as on August 31,2021 as against 12.9% as on March 31, 2021 and collection efficiency of over 92% every month since June 2021.

The company has demonstrated its ability to raise Rs.705.40 crore by ways of term loans, NCD, Commercial Paper in FY2021 from a diversified base of around 25 lenders including large public and private sector banks. The rating continues to take into account the governance framework of U GRO Capital wherein majority of the Board comprises of Independent Directors, nominee directors and an experienced management team. The rating also factors in the company's high capitalization levels and low gearing levels assessing it as financially stable.

U GRO continues to invest into its distribution channel to diversify its asset profile within MSME from 1 Lac loan to 5 crore loan segment. This has in return led to subdued Return on Average Assets (RoAA) of 1.98% as on March 31, 2021 (1.90% as on March 31, 2020). Acuite takes cognisance of recent co-lending partnership with Bank of Baroda along with proposed partnerships pipeline which along with focus on branch network is expected to drive the outstanding portfolio growth going forward.

On the rating upgrade, Mr. Shachindra Nath, Executive Chairman and Managing Director, said "We at U GRO Capital are delighted with the rating upgrade by Acuite. U GRO is building one of India's largest FinTech for small business financing with an aspiration to serve more than 1 million customers and take 1% market share to the outstanding credit of MSME financing. Our focus on building our entire underwriting on the Tripod of Data driven by GST Banking and Bureau has reached full maturity and we believe that MSME financing is at the point of inflection where it would reach to consumer financing level in next few years.

This is also a testament to our efforts in the last few years which has allowed us to sail on our rapid growth journey, as we are now expanding our branch network to 100 and increasing employee strength to 1000, by FY2022."

Shares of UGRO CAPITAL LIMITED was last trading in BSE at Rs. 127.3 as compared to the previous close of Rs. 128.9. The total number of shares traded during the day was 103540 in over 1060 trades.

The stock hit an intraday high of Rs. 133.5 and intraday low of 126.05. The net turnover during the day was Rs. 13408165.


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