Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Rating Rationale
Acuité has reaffirmed its long-term rating to ‘ACUITE BBB+’ (read as ACUITE Triple B Plus) on the Rs. 125.00 crore bank facilities of UV Asset Reconstruction Company Limited (UVARCL). The outlook is 'Stable'.
Rationale for the rating
The rating continues to factor the company's skilled management and promoters, robust recoveries and earning profile, comfortable capitalization, and overall gearing. Moreover, the financial performance of UVARCL has seen a significant improvement in the profitability levels due to a major recovery from an account which resulted in the total income to reach Rs 106.88 Cr. in FY26 (provisional) from Rs 33.98 Cr. in FY25. Profitability also increased to Rs 28.12 Cr. in FY26 (provisional) from Rs 2.30 Cr. in FY25. The rating also factors in the healthy capitalization metrics as reflected by CRAR and gearing levels of 92.22 percent (provisional) and 0.02 times (provisional), respectively, as of March 31, 2026. The rating however is constrained by the segments record of resolving stressed assets, fierce competition, and the potential of unfavourable revisions to the system governing distressed assets.
Going forward, any changes in promoter shareholding and movement in capitalization buffers would remain key monitorables. Further, Acuité has taken cognizance of the ongoing proceedings with the Income Tax Department's. Acuité, takes note of the situation and will keep a tab on these developments. Going forward, UVARCL’s ability to profitably grow and achieve timely resolution of assets along with changes in promoter shareholding are key credit monitorable.
About the company
New Delhi based, UV Asset Reconstruction Company Limited was incorporated in 2007. Mr. Kishore Kumar Sansi, Mrs. Uma Shankar Paliwal, Mr. Dhan Raj, Mr. Gurpreet Kaur, Mr. Ritesh Aggarwal, Mr. Mayank Dinesh Shah, Justice (Retd.) Hrishikesh Roy, Justice (Retd.) Ravi Shanker Jha are directors of the company. The Company commenced its Business as an Asset Reconstruction Company. The company acquires Non-performing assets from various banks and financial Institutions.
Unsupported Rating
Not Applicable
Analytical Approach
Acuité has adopted a standalone approach on UVARCL’s business and financial risk profile for arriving at the rating.
Key Rating Drivers
Strength
Experienced promoters, management and strong shareholders
UVARCL has a team of qualified and experienced professionals to run various business operations. The Board of the company comprises of experienced professionals with banking and legal background. As on 31st March 2026, public sector banks and insurance companies hold 7.50% stake in the company. These include Central Bank of India, Bank of Maharashtra, Union Bank of India, Bank of India, Indian Bank, Punjab National Bank, National Insurance Company Limited and United India Insurance Company Limited.
Improved Earnings profile
UVARCL’s revenue profile comprises income from management fees, income from investments in financial assets and investments in security receipts. The company reported total income of Rs. 106.88 Cr. (provisional) in FY2026 as against Rs. 33.98 Cr. in FY2025. The company has seen a significant improvement in the profitability levels due to a major recovery from an account which boosted the total revenue. The company reported Profit after Tax (PAT) of Rs.28.12 Cr. (provisional) in FY2026 as against Rs.2.30 Cr. in FY2025. Its acquisitions increased in FY2026 to Rs.229.09 Cr. as against Rs.139.67 Cr. in FY2025 which has led to an increase in AUM from Rs.523.71 Cr. in FY2025 to Rs.689.99 Cr. in FY2026. Acuité believes that the company’s ability to maintain a steady growth in revenues will be linked to its ability to maintain a consistent acquisition strategy; and controlling credit costs will be attained by timely and successful resolution of the acquired assets.
Comfortable capitalization
The company's capital position is comfortable as reflected by CRAR of 92.22 percent (provisional) as on March 31, 2026 (P.Y: 89.62 percent). The increase in CRAR is attributable to capital infusion in the form of CCPS of Rs. 65.00 Cr during FY26. Further, the gearing remained at 0.02 times as on March 31, 2026 (provisional) as against 0.18 times as on March 31, 2025.
Weakness
Industry concentration risks; business profile susceptible to timely resolution of assets
The company’s AUM of Rs. 689.99 Cr. (provisional) as on March 31, 2026 (PY: Rs. 523.71), is majorly across 7 industries of which top three industries constitute 68.2 percent. The top three industries are Iron and Steel (34.78 per cent), Hospitality (19.53 per cent) and Infrastructure (13.89 per cent). UVARCL’s acquisition strategy is sector agnostic with a focus on aggregation and consolidating the share in the overall debt of the acquisition. The recoveries have reduced from Rs. 228.99 Cr. during FY25 to Rs. 62.82 Cr. during FY26. Any signs of economic contraction in near to medium term would not be conducive for effective and speedy resolution of stressed assets for ARC’s like UVARCL.
Inherent challenges in the asset reconstruction business
UVARCL is likely to continue to face challenges given the inherent nature of the asset reconstruction business. The changes in the regulatory regime pertaining to acquisition of distressed assets from banks by ARC has tilted the balance in favour of those ARCs who are able to acquire assets for direct cash conditions as against issuance of Security receipts. The current disposition does not provide any significant benefits to the banks (sellers of these distressed assets) in case the investment of the bank in these SR’s exceed a threshold limit. Hence, the banks are incentivized to go for cash deals. While the regulation has allowed QBs investment, the ability of any ARC to tap this route will depend to a large extent on their demonstrated track record of recovery especially in a similar sector. Any challenges in achieving meaningful resolution of these assets will also have a bearing on the ability of the ARC to attract future support from the QBs for their acquisitions. The intense competition from other ARC’s will also add to the headwinds in achieving the growth in scale of operations.
Rating Sensitivity
Potential triggers (individual or collective) for an upward rating action:
Expected resolution within the specified time period
Growth in the AUM and subsequent impact on the earning profile
Potential triggers (individual or collective) for a downward rating action:
Longer than envisaged delays in the resolution of large accounts
Material write-offs and its impact on the earning profile
High leverage more than 3 times on a sustained basis and low liquidity buffers
Liquidity Position
Adequate
The company’s liquidity profile is adequate as on March 31, 2026. The acquisitions are funded through a mix of equity, QB funds and promoter funds with largely no scheduled payments. The cash flows of ARCs are generally uneven and a portion of revenues will depend on inflows from the resolution of SRs and upside revenues. Any challenges in ensuring steady revenue flow through timely resolution of the distressed assets will impact the liquidity buffers. The company has overdraft limits amounting to Rs. 100 Cr. as on March 31, 2026(provisional) with a low gearing of 0.02 times. There are no term loans as on March 31, 2026, hence, there are no fixed debt obligations. Additionally, the company has cash and cash equivalents of Rs. 3.24 Cr. (provisional) as on March 31, 2026.
Outlook: Stable
Other Factors affecting Rating
None
Key Financials - Standalone / Originator
Particulars
Unit
FY26 (Provisional)
FY25 (Actual)
Total Assets*
Rs. Cr.
322.84
256.48
Total Income**
Rs. Cr.
106.88
33.98
PAT
Rs. Cr.
28.12
2.30
Net Worth
Rs. Cr.
310.38
217.27
Return on Average Assets (RoAA)
(%)
9.71
0.97
Return on Average Net Worth (RoNW)
(%)
10.66
1.07
Debt/Equity
Times
0.02
0.18
Gross NPA
(%)
NA
NA
Net NPA
(%)
NA
NA
*Net of Intangible assets
**Total income is net of interest expense
NA - Not applicable
Status of non-cooperation with previous CRA (if applicable):
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
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