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High Yield | IND A+/Stable | Minimum Investment: 10k Only
U GRO Capital is issuing the Non-Convertible Debentures. These NCDs are IND A+/Stable rated. The NCDs are being issued in five series: coupon ranges from 10% to 10.50% p.a. and different tenures of 18 months, 24 months, 30 months and 42 months. The NCDs are secured and redeemable in nature.
U GRO Capital NCD IPO: Coupon rates and effective yield for each of the series
Allocation Ratio
The allocation ratio is prepared based on norms laid down by SEBI. Before announcing the allocation ratio, the same has to be approved by SEBI. Once the IPO subscription closes, applications will be divided into different categories. The category-wise allocation ratio is always decided and declared during the launch of the particular IPO. Considering the Allocation Ratio, units will be assigned to applicants. Refer to the chart to know the application ratio for U GRO Capital NCD-IPO.
Investment Process for U GRO Capital NCD IPO
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Financial Overview
Snapshot stating the Revenue, Expenses, and PAT
Cash flow for last 5 years
Cash flow refers to the movement of cash in and out of the business at a specific point in time. It represents the net balance of the cash movement.
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- *Cash flow from operating activities reflects the amount a company generates through its product of services.
- **Cash flow from investing activities reflects cash generated and spent relating to investing activities, like purchase of assets, sales of securities etc.
- ***Cash flow from financing activities gives an insight into the financial stability of a company to its investors. It reflects the net flows of cash that are used to fund the company.
Liquidity
Adequate Liquidity:
- Comfortable capital base and diversified funding sources support liquidity.
- The company’s ability to raise funds from various financial institutions enhances its liquidity profile.
Ratio Analysis
Issue analysis
Pros
- The NCD is A+ rated security with a stable outlook.
- The coupon rate is upto 10.5% which is much higher than FDs.
Cons
- Interest Coverage Ratio has been decreasing over the years indicating that the company might not be able to service its debt obligation.
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About U GRO Capital
UGro Capital Limited, formerly known as Chokhani Securities Limited, was acquired in 2018 by Shachindra Nath, its Vice Chairman and Managing Director. Since then, the company has focused on providing tailored financial solutions to India’s MSME (Micro, Small, and Medium Enterprises) sector. UGro offers a variety of lending products with diverse tenors and ticket sizes to cater to the unique needs of MSMEs. With a vast network of 164 branches across the country, UGro has rapidly expanded its Assets Under Management (AUM), which stood at INR 92.2 billion as of 1QFY25, with 45% of AUM managed through off-book volumes. The company is publicly listed on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE), solidifying its position as a key player in MSME lending.
Strengths
Robust Asset Under Management (AUM) Growth:
- AUM increased to ₹11,067 crore as of December 31, 2024, up from ₹9,047 crore on March 31, 2024.
- Growth driven by strong traction in the MSME financing segment and an expanding operating network.
Comfortable Capitalization:
- Reported net worth of ₹1,998 crore as of December 31, 2024.
- Total equity capital raised since inception amounts to ₹1,750 crore, including ₹510 crore infused in Q1 FY2025.
Diversified Funding Profile:
- Enhanced funding from public sector banks, development financial institutions, and other financial institutions.
- Off-book portfolio constitutes 44% of AUM as of December 31, 2024, up from 40% on March 31, 2023.
Weakness
Modest Earnings Profile:
- Return on Managed Assets (RoMA) stood at 1.2% (annualized) for the first nine months of FY2025, compared to 1.4% in FY2024 and 0.8% in FY2023.
- Operating expenses remain high due to expansion, with operating cost to average managed assets ratio at 3.6% for the first nine months of FY2025, slightly down from 4% in FY2024.
Asset Quality Concerns:
- Gross Stage III assets on the own book decreased to 2.4% (₹145 crore) as of December 31, 2024, from 3.4% (₹170 crore) on March 31, 2024.
- 90+ days past due (dpd) as a percentage of AUM remained stable at approximately 2.0% during the same period.
- The improvement in Gross Stage III ratio partly due to write-offs amounting to 1.2% (₹74 crore) in the first nine months of FY2025.
- Restructured book stands at ₹24 crore (~0.4% of own book), with 0.1% in Gross Stage III.
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Source- Prospectus March 26, 2025
Disclaimer – The information is published as on date 10/08/2024 based on information available on Prospectus March 26, 2025. The information may be subject to change in case of change in terms of prospectus or any other reason as the case maybe. Contents which are exclusively for educational information/knowledge sharing on capital market concepts and has no influence the investment/sale decisions of any investors
