UGRO Capital Limited is coming up with Secured, Rated, Listed, Redeemable Non-Convertible Debentures available for subscription from October 10, 2024, to October 23, 2024. This presents an attractive investment opportunity, backed by a credit rating of A+/Stable from INDIA Ratings. This blog will provide details about the company, its offerings, and its financial performance. Given below are the details of the issue:
Issue Highlights
| Issuer Name | UGRO Capital Limited |
| Nature of Instrument | Secured Redeemable Non-Convertible Debentures |
| Rating | A+/Stable by INDIA Ratings |
| Seniority | Senior Secured |
| Face Value | Rs. 1,000 per NCD |
| Base Issue Size | Rs. 10,000 lakh |
| Option to retain oversubscription | Rs. 10,000 lakh |
| Coupon | Up to 10.40% |
| Tenor | 18/24/30 months |
| Issue Date | October 10, 2024 to October 23, 2024 |
| Minimum Investment | Rs. 10,000 only |
Specific Terms of the NCD Public Issue across different series
Company Profile
- UGRO Capital Limited is a systemically important non-deposit-taking Non-Banking Financial Company (‘NBFC’) registered with the RBI. It is a publicly listed entity on both the NSE and BSE with a market capitalization of INR 22.65 billion.
- UGRO Capital Limited is a data-driven lending platform that leverages its strong distribution network and data-tech methodology to address India’s small business credit gap.
- UGRO is in collaboration with 15 co-lending partners, 55+ lenders, 45+ fintechs, 65+ Anchors, 70+ OEMs, and 650+ GRO partners to provide data-backed customized finance solutions to over 83,000 MSMEs across India.
- UGRO specializes in lending to SMEs and MSMEs, focusing on sectors like healthcare, education, chemicals, food processing, hospitality, electrical equipment & components, auto components, light engineering, and micro enterprises.
- The company caters to more than 83,500 customers, with its 164 branches divided into two segments- 23 prime branches are operating in metro areas, tier 1, and tier 2 cities having customers with turnovers ranging from ₹1 crore to 15 crore, and 141 micro branches are located in tier 3 to 6 cities, having customers with turnovers of less than ₹1 crore.
- The loan products offered by UGRO Capital Ltd. are as follows:
- Secured Business Loans
- Business Loans
- Micro Enterprise Loans
- Machinery Loans
- Supplier Chain Finance
The product Profile as of June 30, 2024, is as follows:
Top 4 Shareholders of Equity Shares as of September 30, 2024
| S. No. | Name of the Shareholder | Total shareholding as a % of the total number of Equity Shares* |
| 1 | Danish Sustainable Development Goals Investment Fund K S | 10.82 |
| 2 | Cleasky Investment Holdings Pte Limited | 10.73 |
| 3 | NewQuest Asia Investments III Limited | 10.73 |
| 4 | Samena Fidem Holdings | 10.95 |
* Assuming full conversion of convertible securities
Performance Highlights of UGRO Capital Limited for three months ended June 30, 2024
Financial Parameters of the Company:
(Rs. in lakhs)
| Particulars | For three months period ended June 30, 2024 | FY 2024 | FY 2023 | FY 2022 |
| Total AUM | 9,21,772.71 | 9,04,705.74 | 6,08,070.69 | 2,96,890.60 |
| Total Income | 30,157.88 | 1,08,168.12 | 68,376.28 | 31,341.59 |
| Net Worth** | 1,91,716.25 | 1,43,836.17 | 98,404.31 | 96,656.32 |
| Profit after Tax | 3,035.59 | 11,934.48 | 3,977.64 | 1,455.06 |
| CRAR (%) | 27.94% | 20.75% | 20.23% | 34.37% |
| Net Stage 3 Assets (%) | 1.59% | 1.64% | 1.31% | 1.70% |
**Net worth = Equity Share Capital + Other Equity
Strengths of Ugro Capital Limited
- Cutting-edge operating model and credit strategy
Technology is at the forefront of the company’s operations and has implemented a well-defined IT strategy using a sectoral lending approach to identify commonalities within the diverse MSME segment.
- Diverse borrowing profile and efficient asset-liability management
The company has a diversified funding profile, established rapport with its lenders, and consistently serviced its debt obligations. It has access to a wide range of liquidity through term loans from banks, financial institutions, NBFCs, and NCD issuances.
- Robust distribution capability with a focus on tailored solutions
The company provides an array of products, including secured LAP, micro-enterprise loans, machinery loans, unsecured business loans, and supply chain financing to meet the diverse credit needs of MSMEs. It has four main distribution channels that cater to the entire MSME segment, from prime to micro customers. The channels are (a) Branch Led Channel (b) Ecosystem Channel (c) Partnerships and Alliances Channel (d) Direct Digital Channel.
- Data First Approach
The company has adopted a data-driven approach in underwriting as well as in all areas of its business. It has identified various aspects where data analytics could enhance efficiency and is now widely utilized throughout the organization.
- Significant Institutional Capital
The company raised institutional equity capital aggregating around ₹34,000 lakh in the financial year 2024 from a diverse group of institutional investors. As of June 30, 2024, 56.46% of the paid-up share capital of the company is held by 4 of our largest shareholders which are IFU, ADV Partners, New Quest, and Samena Capital.
- Extensive reach across a diverse MSME base and customer-sourcing models
The company has a presence in PAN India and has developed a varied customer base across 164 branches located in 15 states and union territories.
Source: Information Memorandum
Investor Categories
The categories of investors in a bond public issue can be described as the various segments or types of investors who can take part in the offering. The issuer assigns these categories as per the guidelines set by regulatory bodies such as SEBI, to allocate the available bonds amongst these categories. Here is the allocation ratio for UGRO Capital Limited’s Public Issue for this issue.
Category I- Institutional Portion- 25% of the overall issue size- Public Financial Institutions, Insurance companies, Scheduled Banks, Provident Funds, AIFs, etc.
Category II– Non-institutional Investors- 25% of the overall issue size- Companies, Co-operative Banks, Trusts, Partnership Firms, Association of Persons, etc.
Category III– High Net-worth Individual Investors- 25% of the overall issue size- Resident Indian individuals or Hindu Undivided Families through the Karta applying for an amount aggregating to above ₹ 10,00,000 across all options of NCDs in the Issue.
Category IV– Retail- 25% of the overall issue size- Resident Indian Individuals or Hindu Undivided Families through Karta applying for an amount aggregating up to and including ₹10,00,000.
How to Apply through TheFixedIncome.com?
Information Memorandum:
An Information Memorandum (IM) can be defined as an extensive document that provides investors with comprehensive information about the bond issue. It provides in-depth information for investors to thoroughly evaluate the bond and make well-informed decisions. Typically, an IM contains intricate details about the issuer’s business, financial history, management team, details of the issue, associated investment risks, and allocation of funds from the issue, and also includes regulatory and legal disclosures.
The link to the Information Memorandum of bond public issue of UGRO Capital Limited is given below:
https://www.thefixedincome.com/storage/bondprimary_imfiles/1728111493UGROCapitalLimitedIM.pdf
Conclusion
In conclusion, the bond public issue by UGRO Capital Limited offers a promising opportunity for investors seeking to invest in Secured Redeemable Non-Convertible Debentures. Rated A+/Stable by INDIA Ratings, the issue is backed by a strong company profile, and impressive financial track record, that attract investors from diverse categories. However, investors must go through the IM thoroughly before investing and take into account their risk appetite and investment objectives.
Disclaimer: This article is based on publicly available information and other sources believed to be reliable. The information provided in this article is intended for general, educational, and awareness purposes only and should not be considered a comprehensive disclosure of every material fact. It should not be interpreted as investment advice for any individual or entity. The article makes no guarantees regarding the completeness or accuracy of the information and disclaims all liabilities, losses, and damages arising from the use of this information. Investments in debt securities/ municipal debt securities/securitized debt instruments are subject to risks including delay and/ or default in payment. Read all the offer-related documents carefully.
