Press Release November 15, 2024 UP MONEY LIMITED Rating Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	200.00	ACUITE BBB- | Stable | Reaffirmed	-
Total Outstanding	200.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

­Acuite has reaffirmed the long-term rating of 'ACUITE BBB-' (read as ACUITE triple B minus) on the Rs 200 Cr. bank facilities of UP Money Limited (UML). The outlook is 'Stable'. Rationale for Rating The rating continues to take into account the experienced management team and healthy resource profile of the company. UML’s AUM grew to Rs. 601.89 Cr. as on March 31, 2024 from Rs. 518.12 Cr. as on March 31, 2023. The company’s disbursements increased to Rs. 544.28 Cr. for FY24 as against Rs. 463.73 Cr. for FY23. The credit profile of the company derives strength from its demonstrated ability to raise capital in the form of debt. UML has been able to raise funds through various Banks/FIs and also has been able to execute multiple off balance sheet transactions. In FY24, the Company was able to raise fresh debt of around Rs. 248.26 Cr. The rating is however constrained by the company’s high exposure towards unsecured MSME loans, slight deterioration in asset quality, and geographical concentration. The gearing decreased from 4.07 times as on FY23 to 3.99 times as on FY24. Further, the company’s operations are concentrated in Punjab with ~71 percent of the portfolio outstanding as on June 30, 2024. Going forward, any movement in asset quality or profitability metrics along with any deterioration in capital structure or capitalization levels will be a key credit monitorable.

About the company

­­UP Money Ltd. (UPL) started operations in November 2014 following the acquisition of Sukhjit Finance Ltd, a company incorporated on February 6, 1995 under the Companies Act, 1956. The company’s name was changed to UP Money Ltd w.e.f. March 2, 2015. The company is promoted by Mr. Ajit Singh Chawla and Mr. Sumel Singh Chawla. UPL offers affordable financing for two-wheeler loans and micro, small & medium enterprises (MSMEs), mainly for rural livelihood advancement, with the aim to provide finance for income generating activities, socio-economic development and financial inclusion. The company has its registered office located at Ludhiana, Punjab.

Unsupported Rating

­Not Applicable

Analytical Approach

­Acuité has considered standalone business and financial risk profile of UML to arrive at the rating.

Key Rating Drivers

Strength

­­Experienced promoters and management team Up Money Limited (UML) is promoted by Mr.Ajit Singh Chawla, a retired insurance professional having an experience of around two decades with National Insurance Company Ltd and Mr. Sumel Singh Chawla, seasoned finance professional who has held leadership positions in various multinational banks and management consultancy firms. The board of the Company also includes two professionally qualified Independent Directors, and a Non Executive Director. The promoters and Promoter group companies hold majority stake in the Company with the remaining being held by Non-promoter Associates and friends & relatives as on 31st March 2024. Adequate financial risk profile with diversified funding mix UML’s networth stood at Rs. 107.07 Cr. as on Mar 31, 2024 and reported adequate capital adequacy ratio (CAR) of 25.34 percent as on Mar 31, 2024 comprising majorly to Tier 1 Capital. The credit profile of the company derives strength from its demonstrated ability to raise capital in the form of debt. UML has been able to raise funds through various Banks/ FIs and also has been able to execute multiple off balance sheet transactions. However, the average cost of borrowing remains on the higher side. UML’s financial risk profile remains adequate as reflected by PAT of Rs. 11.84 Cr. in FY2023 as against Rs 10.94 Cr. in FY2022. The Return on Average Assets (RoAA) stood at 2.28 percent for FY2024 (annualized). Acuité believes, going forward, the ability of the company to mobilize low cost funding through debt/ sub debt and its ability to deploy the funds profitably will be a key rating monitorable.

Weakness

­­Geographical concentration risk; modest capital structure:  UML forayed in the lending segment in 2014, following the acquisition of Sukhjit Finance Ltd, a company incorporated on February 6, 1995 under the Companies Act, 1956. The company’s loan book grew to Rs. 601.89 Cr. as on March 31, 2024, from Rs. 518.12 Cr. as on March 31, 2023. Further, the company’s operations are concentrated in Punjab with ~71 percent of the portfolio outstanding as on June 30, 2024. The company has its operations in Punjab and has presence in eight other states. Occurrence of events such as slowdown in economic activity or shifting of activity to other geographies could impact the cash flows of the borrowers, thereby impacting credit profile of UML’s borrowers. The company’s ability to maintain its asset quality while increasing its presence in the newer geographies will remain a key rating monitorable. The company’s capital structure is marked by Networth of Rs. 107.07 Cr. as on March 31, 2024 and total debt of Rs.  427.07 Cr. resulting in debt/equity ratio of 3.99 times (PY 4.07 times). The same stood at 3.51 times as on Jun 30, 2024. Acuité believes that any significant deterioration in asset quality and elevation in gearing levels will adversely impact the credit risk profile and will remain a key rating sensitivity factor.

Rating Sensitivity

­ Ability to raise capital, both debt and equity. Movement in gearing levels Movement in profitability metrics Movement in Asset Quality and Collection efficiency. Geographical concentration

Liquidity Position

Adequate

­­The company has unencumbered cash and bank balances (Inclusive of Deposits) of Rs. 116.82 Cr. as on March 31, 2024.

Outlook: Stable

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Other Factors affecting Rating

­None

Key Financials - Standalone / Originator

­ Particulars Unit FY24 (Actual) FY23 (Actual) Total Assets** Rs. Cr. 547.16 490.67 Total Income* Rs. Cr. 69.62 63.81 PAT Rs. Cr. 11.84 10.94 Net Worth Rs. Cr. 107.07 95.24 Return on Average Assets (RoAA) (%) 2.28 2.59 Return on Average Net Worth (RoNW) (%) 11.70 12.18 Total Debt/Tangible Net worth (Gearing) Times 3.99 4.07 Gross NPA (%) 1.42 1.37 Net NPA (%) 1.15 1.19 *Total income equals to Total Income net off interest expense **Total assets adjusted to Deferred Tax liability

Status of non-cooperation with previous CRA (if applicable):

­­Not Applicable

Any other information

None

Applicable Criteria

• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Banks And Financial Institutions: https://www.acuite.in/view-rating-criteria-45.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

­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook 22 Oct 2024 Term Loan Long Term 9.20 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Term Loan Long Term 2.10 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Term Loan Long Term 2.81 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Term Loan Long Term 1.89 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Cash Credit Long Term 3.75 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Cash Credit Long Term 5.00 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Term Loan Long Term 1.81 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Proposed Long Term Loan Long Term 48.85 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Term Loan Long Term 8.35 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Term Loan Long Term 3.18 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Cash Credit Long Term 1.00 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Term Loan Long Term 6.82 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Term Loan Long Term 6.66 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Term Loan Long Term 2.74 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Term Loan Long Term 13.51 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Term Loan Long Term 5.00 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Term Loan Long Term 25.00 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Proposed Long Term Loan Long Term 30.00 ACUITE BBB- | Stable (Assigned) Term Loan Long Term 2.94 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Term Loan Long Term 8.14 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) Term Loan Long Term 11.25 ACUITE BBB- | Stable (Reaffirmed (Positive to Stable)) 25 Sep 2023 Term Loan Long Term 2.22 ACUITE BBB- | Positive (Reaffirmed) Term Loan Long Term 15.77 ACUITE BBB- | Positive (Reaffirmed) Term Loan Long Term 1.96 ACUITE BBB- | Positive (Reaffirmed) Term Loan Long Term 1.13 ACUITE BBB- | Positive (Reaffirmed) Term Loan Long Term 5.11 ACUITE BBB- | Positive (Reaffirmed) Term Loan Long Term 1.86 ACUITE BBB- | Positive (Reaffirmed) Term Loan Long Term 12.36 ACUITE BBB- | Positive (Reaffirmed) Cash Credit Long Term 3.75 ACUITE BBB- | Positive (Reaffirmed) Cash Credit Long Term 5.00 ACUITE BBB- | Positive (Reaffirmed) Cash Credit Long Term 2.00 ACUITE BBB- | Positive (Reaffirmed) Term Loan Long Term 4.66 ACUITE BBB- | Positive (Reaffirmed) Proposed Long Term Loan Long Term 41.17 ACUITE BBB- | Positive (Reaffirmed) Term Loan Long Term 12.93 ACUITE BBB- | Positive (Reaffirmed) Term Loan Long Term 8.64 ACUITE BBB- | Positive (Reaffirmed) Term Loan Long Term 3.06 ACUITE BBB- | Positive (Reaffirmed) Term Loan Long Term 1.00 ACUITE BBB- | Positive (Reaffirmed) Proposed Long Term Bank Facility Long Term 20.00 ACUITE BBB- | Positive (Assigned) Term Loan Long Term 13.48 ACUITE BBB- | Positive (Reaffirmed) Term Loan Long Term 10.00 ACUITE BBB- | Positive (Reaffirmed) Term Loan Long Term 3.90 ACUITE BBB- | Positive (Reaffirmed) 07 Nov 2022 Term Loan Long Term 0.67 ACUITE BBB- | Stable (Assigned) Term Loan Long Term 5.00 ACUITE BBB- | Stable (Assigned) Term Loan Long Term 15.77 ACUITE BBB- | Stable (Assigned) Term Loan Long Term 5.24 ACUITE BBB- | Stable (Assigned) Term Loan Long Term 1.72 ACUITE BBB- | Stable (Assigned) Term Loan Long Term 2.05 ACUITE BBB- | Stable (Assigned) Term Loan Long Term 7.00 ACUITE BBB- | Stable (Assigned) Term Loan Long Term 0.93 ACUITE BBB- | Stable (Assigned) Term Loan Long Term 6.57 ACUITE BBB- | Stable (Assigned) Term Loan Long Term 20.00 ACUITE BBB- | Stable (Assigned) Cash Credit Long Term 3.75 ACUITE BBB- | Stable (Assigned) Cash Credit Long Term 5.00 ACUITE BBB- | Stable (Assigned) Cash Credit Long Term 2.00 ACUITE BBB- | Stable (Assigned) Term Loan Long Term 6.06 ACUITE BBB- | Stable (Assigned) Proposed Long Term Loan Long Term 68.24 ACUITE BBB- | Stable (Assigned)

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Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating Capital Small Finance Bank Not avl. / Not appl. Cash Credit 16 Dec 2015 Not avl. / Not appl. Not avl. / Not appl. 3.75 Simple ACUITE BBB- | Stable | Reaffirmed Jana Small Finance Bank Ltd. Not avl. / Not appl. Cash Credit 26 Nov 2021 Not avl. / Not appl. Not avl. / Not appl. 5.00 Simple ACUITE BBB- | Stable | Reaffirmed IDFC First Bank Limited Not avl. / Not appl. Cash Credit 08 Aug 2022 Not avl. / Not appl. Not avl. / Not appl. 1.00 Simple ACUITE BBB- | Stable | Reaffirmed Not Applicable Not avl. / Not appl. Proposed Long Term Loan Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 78.85 Simple ACUITE BBB- | Stable | Reaffirmed Capital Small Finance Bank Not avl. / Not appl. Term Loan 06 Jan 2024 Not avl. / Not appl. 01 Jan 2027 2.10 Simple ACUITE BBB- | Stable | Reaffirmed Kotak Mahindra Bank Not avl. / Not appl. Term Loan 24 Jan 2023 Not avl. / Not appl. 01 Mar 2026 8.35 Simple ACUITE BBB- | Stable | Reaffirmed Small Industries Development Bank of India Not avl. / Not appl. Term Loan 28 Mar 2023 Not avl. / Not appl. 10 Mar 2025 3.18 Simple ACUITE BBB- | Stable | Reaffirmed Jana Small Finance Bank Ltd. Not avl. / Not appl. Term Loan 16 Jun 2023 Not avl. / Not appl. 03 Jun 2025 6.82 Simple ACUITE BBB- | Stable | Reaffirmed Dhanlaxmi Bank Ltd Not avl. / Not appl. Term Loan 19 Jun 2023 Not avl. / Not appl. 30 May 2026 6.66 Simple ACUITE BBB- | Stable | Reaffirmed Capital Small Finance Bank Not avl. / Not appl. Term Loan 20 Jul 2023 Not avl. / Not appl. 21 Jun 2026 2.74 Simple ACUITE BBB- | Stable | Reaffirmed Kotak Mahindra Bank Not avl. / Not appl. Term Loan 10 Nov 2021 Not avl. / Not appl. 01 Mar 2025 1.81 Simple ACUITE BBB- | Stable | Reaffirmed IDFC First Bank Limited Not avl. / Not appl. Term Loan 06 Mar 2018 Not avl. / Not appl. 01 Mar 2025 9.20 Simple ACUITE BBB- | Stable | Reaffirmed Capital Small Finance Bank Not avl. / Not appl. Term Loan 03 Sep 2022 Not avl. / Not appl. 11 Sep 2025 2.81 Simple ACUITE BBB- | Stable | Reaffirmed Jana Small Finance Bank Ltd. Not avl. / Not appl. Term Loan 24 Nov 2022 Not avl. / Not appl. 03 Oct 2024 1.89 Simple ACUITE BBB- | Stable | Reaffirmed Capital Small Finance Bank Not avl. / Not appl. Term Loan 25 Jul 2024 Not avl. / Not appl. 21 Jun 2027 2.94 Simple ACUITE BBB- | Stable | Reaffirmed ESAF Small Finance Bank Not avl. / Not appl. Term Loan 14 Mar 2024 Not avl. / Not appl. 31 Mar 2026 8.14 Simple ACUITE BBB- | Stable | Reaffirmed Jana Small Finance Bank Ltd. Not avl. / Not appl. Term Loan 29 Jan 2024 Not avl. / Not appl. 30 Jan 2026 11.25 Simple ACUITE BBB- | Stable | Reaffirmed State Bank of India Not avl. / Not appl. Term Loan 31 Aug 2023 Not avl. / Not appl. 31 Aug 2026 13.51 Simple ACUITE BBB- | Stable | Reaffirmed Utkarsh Small Finance Bank Ltd. Not avl. / Not appl. Term Loan 24 Aug 2024 Not avl. / Not appl. 25 Feb 2026 5.00 Simple ACUITE BBB- | Stable | Reaffirmed Indian Overseas Bank Not avl. / Not appl. Term Loan 12 Aug 2024 Not avl. / Not appl. 20 Nov 2027 25.00 Simple ACUITE BBB- | Stable | Reaffirmed

Contacts

Mohit Jain Senior Vice President - Rating Operations Nattasha Venkatesh Associate Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

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­Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai. Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.