High Yield | IND A Stable | Minimum Investment: 10k Only

U GRO Capital is issuing the Non-Convertable Debentures. These NCDs are IND A Stable rated. The NCDs are being issued in three series: coupon ranges from 10.25% to 11% p.a. and different tenures of 18 months, 24 months and 27 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

You can invest in IPOs via GoldenPi in 3 easy steps.

If the investment amount is  less than & up to 10 lakhs, retail investors can apply for an IPO online.

If the investment amount is more than 10 Lakhs.

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.

• • *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.

Ratio Analysis

Issue analysis

Pros 

• The NCD is A rated security with a stable outlook.
• The coupon rate is upto 11% 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.

To get better returns than Bank FDs, invest in NCD-IPOs online. 

About U GRO Capital

Formerly known as Chokhani Securities, U GRO Capital Limited is a publicly listed NBFC. It provides debt financing to MSMEs (Micro, Small and Medium Enterprises) and Indian consumers. It was established in 1993. 

The company’s mission is to “Solve the Unsolved”. They aim to fulfill the credit needs of Small businesses of US$ 600 Bn.

Strengths

• MSME Focus and Wide Reach: Established in 2019, UGRO has amassed INR75.9 billion in assets under management (AUM), operating across 104 branches in nine Indian states. Its clientele spans 24 states, with no single state representing more than 15% of AUM.
• Franchise Expansion: UGRO invests in technology and human resources for franchise growth. It employs a mix of physical and digital methods for various operations like sourcing, underwriting, and collections.
• Off-Balance Growth Focus: UGRO aims for robust off-balance growth, particularly in co-lending and direct assignment segments. These segments grew from 4% to 45% of AUM in 2QFY24, reaching INR75.9 billion despite pandemic challenges.
• Strong Capital Position: Bolstered by a capital infusion of INR3.4 billion in 1QFY24, UGRO boasts a higher capital base of INR13.7 billion in 1HFYE24, ensuring a capital adequacy ratio of 24.2%.
• Diverse Funding Sources: UGRO secures funds from 60 financiers, including major banks. Term loans from various institutions make up a significant portion of its borrowing mix, alongside working capital loans, reflecting a diversified funding strategy.

Weakness

• Steadily Growing Franchise with Limited Track Record: UGRO, established in 2019, has built an AUM of INR66.7 billion. Despite strong https://goldenpi.com/blog/investment-guide/how-to-rebalance-your-portfolio-using-bonds/portfolio growth, its franchise size remains moderate, with a need to establish a longer track record for asset quality seasoning.
• Moderate Profitability with Potential for Improvement: UGRO has been profitable since inception, though profitability in FY20-FY21 benefited from tax write-backs. Profit before tax has been positive but modest, with potential for improvement once operational leverage increases.

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Source- Prospectus February 01, 2024

Disclaimer – The information is published as on date 6/02/2024 based on information available on Prospectus February 01, 2024. 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

About GoldenPi Expert

Abhijit Roy | CEO & CO-Founder GoldenPi

With over 15 years of experience across fixed income and debt markets, he brings deep domain expertise along with a strong focus on investor education and transparency. An alumnus of IIT Kharagpur and IIM Calcutta, his views are personal and should not be considered investment advice.

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