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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Non Convertible Debentures (NCD) | 107.00 | ACUITE A | Reaffirmed & Withdrawn | Removed from Rating Watch | - |
| Non Convertible Debentures (NCD) | 49.28 | Not Applicable | Withdrawn | - |
| Total Outstanding | 0.00 | - | - |
| Total Withdrawn | 156.28 | - | - |
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Rating Rationale |
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Acuité has reaffirmed and withdrawn the long-term rating of ‘ACUITE A’ (read as ACUITE A) on the Rs. 107.00 Cr. non-convertible debentures of UGRO CAPITAL LIMITED (UGRO) and is removed from Rating Watch. The withdrawal is on account of request received from issuer and the NOC received from the debenture trustee and is in accordance with Acuite's policy on withdrawal of ratings as applicable to the respective facility / instrument.
Acuité has withdrawn the long-term rating on the Rs. 49.28 Cr. Non-Convertible Debentures without assigning any rating of UGRO CAPITAL LIMITED (UGRO). The withdrawal is on account of request received from issuer on redemption of the facility and in accordance with Acuite's policy on withdrawal of ratings as applicable to the respective facility / instrument and No dues confirmation received from the debenture trustee. Rationale for removal from Rating Watch: The removal of Rating Watch takes into consideration the completion of the aquisition of Profectus Capital by UGRO as per its public notification dated December 8 , 2025. UGRO, previously received the RBI approval for this acquisition transaction on September 17, 2025. Currently, Profectus Capital is a wholly owned subsidiary of Ugro Capital Limited. The merger of the Profectus is subject to Board and shareholder approval. Profectus Capital has an AUM size of ~Rs 3400 Cr. having a portfolio comprising of secured Business Loans, School financing and Machinery loans and the company’s asset mix comprises of 100% secured portfolio. Accordingly, the AUM for the combined entity would be ~Rs 15400 Cr. which would mark a 29 % growth in the total AUM of Ugro Capital and an asset mix of 75:25 secured and unsecured mix with better product diversification. Owing to the healthy asset quality for Profectus Capital, the combined entity is expected to have a positive impact on the overall asset quality of Ugro Capital Limited. The rating reaffirmation continues to consider the sustained traction in the company’s business in FY2025 with the outstanding portfolio growing to about Rs. 12,002.83 Cr. as on March 31, 2025 (March 31, 2024: Rs. 9,047.06 Cr. Cr.). The rating further factors in the experienced management team supported by marquee investors. The gearing levels stood moderately at 3.37 times as on March 31, 2025 as compared to 3.24 times as on March 31, 2024. The rating also derives comfort from the business model, which is based on technology adoption at every stage, right from initial screening of the borrower to monitoring of the exposures at the post disbursal stage. However, the rating remains constrained by the subdued earning profile of UGRO as reflected by the low RoAA (PAT/Average AUM) of 1.86 percent as of March 31, 2025. The company reported its average cost of borrowings at 10.61 percent as on March 31, 2025 (P.Y 10.70 percent). UGRO’s on book GNPA stood at 2.35 percent as on March 31, 2025 as against 3.09 percent as on March 31, 2024. Acuite notes that Rs 243.17 Cr. of repossessed assets are marked as held for sale, considering that total impaired assets stood at Rs.522.97 Cr. for FY 25. |
| About the company |
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UGRO was originally incorporated as Chokhani Securities Limited in 1993. It is a systemically important non-deposit taking non-banking financial company (NBFC) registered with the Reserve Bank of India (RBI). In 2018, pursuant to a change in control and management, the company was renamed UGRO Capital Limited. UGRO's equity shares, commercial paper, and non-convertible debentures are listed on the Bombay Stock Exchange (BSE). The company's equity is also listed on the National Stock Exchange (NSE). The company is based in Mumbai.
UGRO is headed by Mr. Shachindra Nath, a seasoned finance professional, with more than two decades of experience in the financial services sector. He is the Promoter, Vice Chairman and Managing Director of the company. UGRO is a Mumbai based company (registered office). It had 235 branches across the country as of March 31, 2025. UGRO lends to the MSME segment in nine specifically identified sectors i.e. Healthcare, Education, Chemicals, Food Processing/FMCG, Hospitality, Electrical Equipment’s and Components, Auto Components, Light Engineering and Micro-Enterprise segment. UGRO has built diversified distribution channels which consist of a Branch led channel, an Ecosystem consisting of Supply Chain & Machinery Finance, Partnerships & Alliances for Co-lending with smaller NBFCs & FinTechs & Digital Channel. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone financial and business risk profile of UGRO to arrive at the rating |
| Key Rating Drivers |
| Strength |
| Experienced management team supported by marquee investors
UGRO commenced lending operations in 2019 with a focus on lending to the Micro Small and Medium Enterprises (MSME) segment. The company is headed by Vice Chairman and Managing Director, Mr. Shachindra Nath. Mr. Nath has over two decades of experience in BFSI across the insurance, asset management, lending and capital markets sectors. The company is supervised by a majority Independent Board consisting of experienced professional drawn from different background. The other members of the senior management team have experience of around two decades in BFSI sector. UGRO’s investors include private equity players, insurance companies and family offices. The institutional investors include ADV Partners, NewQuest Asia Investments III Limited, PAG (PE firm with a focus on the AsiaPacific region), Samena Capital (a MENA focused PE investment group). In addition to the Private Equity Investors UGRO raised money through QIP and Private Placements from domestic AIFs, Insurance Companies, Family Offices. These investors have infused capital of ~Rs. 650 Cr. in FY2019 and ~Rs. 240 Cr. in FY2020. In FY2024, the company raised equity capital to the tune of Rs. 340 Cr. from new investors such as IFU (Denmark government arm) and other domestic institutions. The company had announced and approved equity raise of Rs 1,332 Cr. in FY2025 in the form of CCD and share warrants and has already raised Rs 510 Cr. in June 2024. For FY2026, the company had announced an additional equity raise of Rs 1315 Cr. in May 2025 in the form of rights issue of Rs 400 Cr. and CCD of Rs 915 Cr. The ability to attract capital from a diverse set of investors points to the credibility of the top management team. It also reflects confidence in the business model and strategy. UGRO’s net worth stood at Rs. 2046.39 Cr. as on March 31, 2025 as compared to Rs. 1438.36 Cr. as on March 31, 2024. The capital adequacy ratio saw a moderation to 19.41 percent as on March 31, 2025 as compared to 20.75 percent on March 31, 2024. The gearing levels stood moderately at 3.37 times as on March 31, 2025 as compared to 3.24 times on March 31, 2024. The company had announced in June 2025, that Ugro will acquire 100% of Profectus Capital in an all-cash deal of the tune of Rs ~1400 Cr, this acquisition is expected to positively impact Ugro Capital’s overall portfolio, however, this transaction is subject to the shareholders and RBI approval, post the RBI approval it would take 6 months for the merger to be completed. Post merger the expected combined AUM of Ugro Capital would stand at ~Rs 15,400 Cr. having a growth of 29 percent in the total AUM, total branch network would increase to 263 branches. Acuité believes, that the experienced management team, presence of marquee investors and adequate capitalisation levels on account of recent infusion will support UGRO’s fund raising plans over the near to medium term. Business model based on high level of digitization and adherence to predefined policies UGRO’s business model is based on technology adoption at each and every stage, right from initial screening of the borrower to monitoring of the exposures, at the post disbursal stage. UGRO’s average ticket size is Rs. 15 lacs, with a maximum single party exposure of ~Rs. 5 Cr. Hence, the portfolio is expected to be granular in nature and have a high degree of technological support for effective monitoring. UGRO’s target clientele are MSME units from nine identified sectors, which are Healthcare, Education, Chemicals, Food Processing/FMCG, Hospitality, Electrical Equipment’s and Components, Auto Components, Light Engineering and Micro Enterprise Segment. UGRO has identified these sectors through an indepth study and recommendations from external advisory agencies. UGRO divides these sectors into multiple sub – sectors and approaches them with the concept of an eco system around them. The credit underwriting process and platforms are designed to ensure a quick turnaround, without compromising on quality of the loan appraised. The company has credit tools such as scorecards, which help in arriving at the credit decision. The management has developed detailed questionnaires for each sub segment, which help in identifying the key credit issues and sharpening the quality of credit decision. The systems and processes are evaluated and reviewed from time to time to improve their efficacy in the credit process. The company has put in place safeguards to minimize the possibility of dilution of these processes. These include clauses in the Article of Association such as the right of appointment/termination of key managerial personnel directly to the board ensuring granularity of the portfolio with loans of more than 1 per cent of its Net Worth or to any related party requiring majority board approval and a unanimous consent of its Asset Liability Committee. Acuité believes that while adherence to stringent underwriting standards may impact the pace of growth of UGRO, it will aid UGRO in maintaining its asset quality in a steady operating environment. Strong and sustained business growth The company witnessed strong and sustained traction in its business in FY2025 with its outstanding portfolio growing to about Rs.12,002.83 Cr. as on March 31, 2025 (March 31, 2024: Rs. 9,047.06 Cr.). In terms of distribution channel wise, disbursals picked up across all the channels viz. branch-led, partnership and alliances (including co-origination arrangements with NBFCs and loans to NBFCs for onward lending), ecosystem channel (machinery loans and supply chain finance) and pools buyout out from other NBFCs. |
| Weakness |
| Moderate earnings profile
The company reported a PAT of Rs. 143.93 Cr. for FY2025 with PBT level of Rs 203.12 Cr. as compared to PAT of Rs. 119.34 Cr. and PBT of Rs 178.76 Cr. in FY2024. Acuité takes note of the sustained pressure on the earnings profile reflected by the annualized RoAA (PAT/Average AUM) of 1.86 percent for FY25. The opex to earning assets moderated to 5.23 percent in FY25 from 5.87 percent in FY24. Acuité believes the ability of the company to scale up the business while mitigating profitability pressures will remain a key monitorable. UGRO's outstanding debt stood at Rs. 6904.12 Cr. as on March 31, 2025. The company has a diversified exposure with lenders including private sector banks, public banks, NCDs, and access to funding via direct assignment and securitization transactions and term loans from other financial institutions. The company reported their average cost of borrowings at 10.61 percent as on March 31, 2025 as against 10.70 percent in previous year. Moderate asset quality UGRO’s on book GNPA stood at 2.35 percent as on March 31, 2025 as against 3.09 percent as on March 31, 2024. The company’s restructured portfolio constitutes Rs. 20.50 Cr. (0.2 percent of the AUM) as on March 31, 2025 (0.5 percent of the AUM as on March 31, 2024). Majority of the restructuring was done in the Branch Led Portfolio within the Education & Hospitality sector. Acuite notes that Rs 243.17 Cr. of repossessed assets are marked as held for sale, considering that total impaired assets stood at Rs.522.97 Cr. for FY 25. |
| ESG Factors Relevant for Rating |
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UGRO belongs to the NBFC sector which complements bank lending in India. Some of the material governance issues for the financial services sector are policies and practices with regard to business ethics, board diversity and independence, compensation structure for board and KMPs, role of the audit committee and shareholders’ rights. On the social aspect, some of the critical issues for the sector are the contributions to financial inclusion and social development, responsible financing including environmentally friendly projects and policies around data privacy. The industry, by nature has a low exposure to environmental risks. UGRO primarily lends to small businesses where access to funds is a challenge. The company proposes to facilitate financial inclusion and growth for MSMEs through secured or unsecured loans as well as supply chain finance. It is important for UGRO to assess the sustainability factors mainly related to environment, social and corporate governance practices for its lending portfolio. It has a well-articulated CSR policy and Smile Foundation, working under the ambit of UGRO, monitors the CSR activities of the company. The company has adequate corporate governance policies on whistle blower programme and related party transactions; it has made adequate disclosures related to board and management compensation and outlines the policies related to diversity and ethical business practices in its code of conduct. UGRO’s board comprises of 6 Independent Directors, which is more than 50 percent of the total board members. |
| Rating Sensitivity |
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| All Covenants |
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Within 45 (Forty Five) calendar days from the end of each quarter, the Company shall submit a certificate signed by the chief financial officer or an authorised signatory of the Company confirming the Company’s compliance with the Financial Covenants set out hereinafter. The Company shall ensure that on the last day of each calendar quarter, (unless specified otherwise) until the Final Settlement Date maintain: (a) The Company shall at all times until the Final Settlement Date, maintain a ratio of Regulatory Capital divided by the Risk Weighted Assets of whichever is higher: (a) 20%(Twenty Percent); or (b) the minimum ratio imposed on the Company according to the Local Requirements. (b) The Company shall at all times until the Final Settlement Date, maintain a ratio of Foreign Currency Assets, minus Foreign Currency Liabilities divided by Regulatory Capital between 50% (Fifty Percent) and -50% (Minus Fifty Percent). (c) The Company shall at all times until the Final Settlement Date, maintain the Portfolio Quality 90 (Ninety) Days Ratio of less than or equal to 7.5% (Seven Decimal Point Five Percent). (d) The Company shall at all times until the Final Settlement Date, maintain the Open Loan Position 90 (Ninety) Days of less than or equal to 20% (Twenty Percent) of the Regulatory Capital. |
| Liquidity Position |
| Adequate |
| The company has the flexibility to raise funds through securitisation transactions. As per the asset liability management (ALM) statement dated March 31 2025, UGRO has no negative cumulative mismatches in up to 6 months bucket. The company has cash and bank balance of about Rs. 544.39 Cr. as on March 31, 2025 |
| Outlook: Not Applicable |
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| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
**RoAA is as per Acuité calculations, and is on average Total Assets; |
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| Status of non-cooperation with previous CRA (if applicable): |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-44.htm |
| Note on complexity levels of the rated instrument |
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