Bond overview

High Yield | A+ Rated | Minimum Investment: 10k Only

U GRO Capital is issuing the Non-Convertible Debentures. These NCDs are A+/Stable by ACUITE and A-/Stable by CRISIL. The NCDs are being issued in three series: coupon ranges from 10.15% to 10.50% p.a. and different tenures of 18 months , 27 months  and 36 months. The NCDs are secured and redeemable in nature.

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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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Issue analysis

Pros 

• The NCD is A+ rated security with a stable outlook.
• The coupon rate is between 10.15% to 10.50% 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.

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.

Financial Overview

Chart stating the Revenue, Expenses, EBIT, Net Worth and PAT

Cash flow for last 5 years (in crores)

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

Key Highlights

FY-2022

• Cumulative Disbursement- Rs. 6000+ Cr
• Asset Under Management- Rs. 3650+ Cr
• Net Worth- Rs 966.56 Cr
• Customers- 25000+
• Branches- 95+
• Employees- 1275+

Strengths

•  Management team supported by marquee investors. The investor committee includes ADV Partners, NEWQUEST Capital Partners, PAG, Samena Capital, PNB Metlife.
• U GRO’s business model is based on technological development. 
• Increase in Asset Under management.

Weakness

• Low profits because of high operational costs.
• Limited history of Operations.

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

Previous NCD IPO from U GRO Capital

U GRO Capital NCD IPO – April 2022, Should you invest?