ValuePickr Forum

Ugro Capital - Opportunity To Invest in a Fintech-like Company Below Book Value

Disclaimer: This investment opportunity is not for all retail investors. As of May 2021, the stock is illiquid. Not an investment advice

Greetings Fellow Pickrs,

I searched the forum, for a topic on Ugro Capital. Was not able to see a thread. So creating this topic.

Before I deep dive into the company, let me begin by mentioning why I started looking at this company:

  1. The MSME/SME lending market in India is large (As per FICCI 87% of MSME in India do not have access to credit; As per company its a USD 600 Bn market opportunity)
  2. Reputed investors have come together to back an individual technocrat who has relevant experience in the industry
  3. As on May 2021, current market price is below than the entry price of PE firms (Around 25% discount to the price they entered at)
  4. Technology being developed by the company is being undertaken in a platform form (where third party lenders can use it)
  5. The stock is illiquid, hence, should the company perform well, the increase in share price can make it rise faster (note that there is a downside volatility attached to it too)

About the company

  • The current era of the company started in 2018, when ex-religare CEO Shachindra Nath raised USD 142 mn from PE firms and acquired a listed shell NBFC called Chokhani Securities (had no operations). The company was rebranded as Ugro Capital and decided to focus on SME/MSME lending
  • Company believes that lending to SME/MSME is a highly specialised segment. To do this, they have worked with CRISIL to shortlist 8 key sectors: Healthcare, Education, Chemicals, Food Processing / FMCG, Hospitality, Electrical Equipment and Components, Auto Components, Light Engineering. (Note each of these sectors contain multiple sub-sectors/allied sectors)
  • They have developed a special underwriting and distribution model for each of these sectors
  • As of Dec 2020, It has a networth of INR 950 Cr, AUM of 1127 cr, 8,400+ customers, 34 branches. Over 70% of the book is secured
  • On the liability side, it has a debt of INR 560+ Cr across 22 lenders
  • As on Dec 2020, the company had a quarterly interest income of ~39 Cr. It had a GNPA of 2.3% and NNPA of 1.4%. The total restructured amount is 3.9% of the book
  • The PE investors of the company are : NewQuest Capital, ADV Partners, Samena Capital, PAG. From the family office side the investors are Himasingka Group, Jaspal Bindra, Famy Care, SAR group. Other public market investors are Indgrowth Capital, PNB Metlife, Chhattisgarh Investments

Why has the company chosen only the above 8 sectors ? (As per the Investor presentation)

  • Large opportunity for lending
  • Less government regulation
  • Less competition from banks
  • Low Geographic competition
  • Secular growth driven by consumption

What differentiates the company ? (Short answer is tech focused approach)

  • Company is building a 100% digital underwriting technology for SME lending - (As per company 28% higher approval rates compared to tradition lending - for similar risks). The underwriting technology is unique for each of these sectors
  • The loan products too are very specialised to each of the above sectors. The turn-around time for disbursal is 4-5 days compared to a traditional lender (25-45 days)
  • While most Fintech are moving via pure-digital method, the company is following an OMNI channel method - Direct via own branches, via supply-chain/ecosystem partners (B2B2B/B2B2C) , Digital, Co-lending
  • Cash flow based lending Vs. Traditional Lending
  • Company has built a plug & play platform for lending (Where banks, NBFCs and other Fintechs can partner). It already has a co-origination lending model in place with ICICI, SBI & BOB

What is the company guidance for next 5 years ?
Company plans to have an AUM of 20,000 Cr.
Target Interest Yield: 16.3%
Target NIM: 8.5%
Target RoA: 4.2%
Target RoE: 18.8%
Target Debt / Equity Ratio: 3.4x
Target number of branches: 270

Key Risks in investment -

  • MSME / SME sectors are highly impacted by covid. This is the key segment of the company. The company had a bounce rate of 20% in unsecured and 15% in secured.
  • Ability to successfully develop the technology and scale accordingly. Ability to meet the guidance provided by them
  • Founder stake is low at 2.88%. This is primarily because the founder is a first generation technocrat and has raised high amount of money (USD 142 mn) in the first round
  • Competition from existing traditional banks who will look to enter this segment for a larger play

Margins for safety -

  • Company has low leverage of 0.59x and a CRAR of 78%. The company also has unencumbered cash of 338 Cr as on March 2021. This is sufficient to absorb losses from Covid
  • The low leverage levels implies that the company has sufficient runway to grow without the need for any further equity dilution. There are no further dilutive warrants/instruments in the company as on date
  • The price of the company is trading at a discount of ~25% to its book value as on date

On the illiquidity of the stock

  • The two week average trading volume is ~8,700 shares (as per BSE)
  • Around 89.04% of the shareholding is held by promoter (2.88%) and the PE investors & family offices (86.16%)
  • My personal thesis I : Overtime as the company scales and delivers good results, the price should ideally shoot up due to low liquidity (a la Gamestop). However, the illiquidity cuts both ways. The price can fall rapidly too (An investor should be prepared to have a long holding period in this investment)
  • My personal thesis II : I believe that over time the liquidity should improve since most PE firms have to return their capital to their LPs (Disclaimer: This is not guaranteed). This will increase the float
  • Should the company undertake a stock-split / bonus share in future, the liquidity will improve

Additional Lever For Growth
Fintech in India itself has been poised for disruption. Similar to how UPI disrupted payments, a new platform called OCEN is coming up which expected to disrupt lending. I would highly recommend reading & watching the below video from isiprt to understand the techtonic shifts happening. Ugro is the first company to undertake trial-run in the GoI run GEM Sahay program (to lend to select vendors)

Recent Investor Presentation (Dec 2020)

Screener Overview -

Profile of Shachindra Nath

Look forward to hear the thoughts & view of fellow pickrs

Disclosure: Invested
Disclaimer: Not an investment Advice / Recommendation


Will OCEN be competing with UGRO?

Not quite.

Think of OCEN (Open Credit Enablement Network) to be a platform which is very similar to UPI (although it is for lending not payments). UPI has many players using it like Gpay, PhonePe & BHIM. Similarly OCEN will have many players using it. Ugro will be one of them

OCEN is a common set of rules/language that all the lenders, credit bureaus, account aggregators and Loan service providers will adhere too. This is help provide credit in a plug and play model - where information is used as a collateral. Information such as bank statements, GST filings, vendor invoice data, receivable time period. Additional, it removes the requirement to have a bi-lateral partnership with every lender & loan service providers.

Similar to how UPI is owned by a non-profit organisation called NPCI, OCEN too is being housed by a non-profit organisation called CredAll

For further reading -


Fantastic writeup @Admantium… I have been interested in ugro for a while due to the conviction of a friend and you have captured the thesis perfectly. Just wanted to add that they conduct a Concall every quarter and they keep updating investor presentations on their website. Their most recent Concall had an interaction between Mr nath and an investor which explains their entire business model brilliantly. Attaching it below, page 8:
Q3 FY2021 Earning Conference Call Transcript (1).pdf (249.0 KB)
Also, they have started with a huge amount of capital and have taken all of their costs upfront ie infrastructure, man power etc so they costs are very high at 7/8 percent. So metrics like ROE etc will look poor for 3 to 4 years until their aum and disbursals reach a high enough point If they maintain their current disbursal run rate (and they say they can).
I am very interested in investing here and considering the underlying risk in this entire sector I’m somehow finding comfort in this company due to the valuations here and considering they have all their tools Already ready(though digital was a bit delayed and should be launched soon) and it’s all about execution and they are very transparent about the same via Concalls and have handled covid well so far.
However, I just cannot get over the liquidity… Its virtually impossible to build a meaningful position here and requires a strategy unto itself. For eg for my friend to just buy 500 shares near or under Rs. 100 took him a total of 6 months so I dread the thought of even starting a position here.

@Admantium I stand corrected. The volume on 17/05 was higher than I’ve seen before at 33k and I managed to build a small position under Rs. 100. Coincidentally the volume increased the day after your post in this forum so the conspiracy theorist in me feels that maybe VP can move mountains sometimes haha

Disc: I am invested. I am not a sebi advisor. Not buy or sell recommendations. Please do your own due diligence before investing.


As per shareholding data, Promoters have no skin in the game . They are only holding 2.8% of shares while retailers are bag-holding with more that 80% of shares. isn’t it a red flag?


The 80+ percent aren’t retailers. They are the PE firms who gave Mr nath the money in akin to the first round though the company was already listed hence making them akin to promoters but they aren’t classified as promoters officially. So actual retailers hold in single digits making the free float less than most stocks in the market. Unlike firms coming in later and adding cash when a company is already running these are firms that helped build the company with the cash they put in from nil so they in theory shouldn’t sell until they get higher valuations than they paid so the holding should be steady for a few years. Tbh a company like this should theoretically not even be on the stock exchanges lol. Its almost as if it got listed 5 years before it actually should and the PE investors would have been looking for an exit during an ipo but the ipo has already taken place so if they want to exit it would need to be through block deals or the open market when there are enough buyers in the future. However if things go bad and the company doesn’t perform they won’t have any buyers lol and hence why I’m not comfortable with the liquidity here since I can’t even comprehend what would happen then(would they buy the balance shares from retailers and de list?) . Its a very unique and tricky situation and unless they are supremely confident I don’t see why they would structure it this way… They must be supremely confident this will work out though else this is just madness or a big red flag and this structure and liquidity is why I’ve given it a pass since I don’t understand it and it leaves it open for manipulation :slight_smile:

@Admantium since you are invested… Is it possible that since the promoter is classified under sebi at under 3 percent that he could theoretically just buy up all the remaining shares himself without breaking any rules which would lead to a ruchi soya like run without sebi even noticing ie a pump and dump? Are there plans to reclassify PE firms as promoters to prevent such manipulation? Its all hypothetical but this is a really different structure so I was just wondering what failsafes could be in place to prevent the stock price from being gamed very easily.
Also, while their profit growth before tax has been impressive through covid any idea why their profit growth after tax is nearly 3X? They are getting some huge tax benefits. Any idea how long this will last?

Disc: I am invested. I am not a sebi advisor. Not buy or sell recommendations. Please do your own due diligence before investing.


In one of the interviews, Mr. Shacindra mentioned that they intentionally looked for a listed entity to start ugro. Excerpt from the interview below -

According to Nath, a listed entity allows for a long-term view on building the business, compared to a private equity-backed unlisted platform, which typically have four- to five-year horizons.

“My view is that the lending businesses can’t be built with a time horizon of 4-5 years. If you are funded by private equity investors and you are unlisted, you are designing yourself to be sold in 4-5 years, as against a 10-15-year view to build the business. The idea was to create an institutional platform, governed, managed and supervised independently and not controlled by anyone."

I agree with the above view point. Working with PE firms implies that in year 3/4 onwards, one has to spend time focussing on providing an exit for them. Focus on business gets lost

Is it possible that since the promoter is classified under sebi at under 3 percent that he could theoretically just buy up all the remaining shares himself without breaking any rules which would lead to a ruchi soya like run without sebi even noticing ie a pump and dump?

Ruchi soya was a unique case if I am not mistaken. It happened because the company was under IBC.
The promoter here cannot buy shares easily. He would have to make an open offer whenever his shareholding crosses 26% or 51%. But more importantly I personally do not think he has the capital to buy all the PE firms stake (If Mr. Nath is reading this, he can correct me :rofl: ). His background is that of an experienced technocrat.

Are there plans to reclassify PE firms as promoters to prevent such manipulation? Its all hypothetical but this is a really different structure so I was just wondering what failsafes could be in place to prevent the stock price from being gamed very easily.

No PE firm would want to be classified as a promoter. It would impede their exit. I can think of only three funds in India who are willing to be classified as a promoter (Everstone - Indostar, Burger King & Blackstone - Embassy REIT, Brookfield - Indostar, Brookfield REIT ). Most others do not classify themselves as promoters. Their investment mandate would not allow them to be classified as one.

It makes little sense for PE firms to buy additional shares to increase their price (for manipulation). The people who would be able to buy the shares from PE firms would be other institutional investors. These investors are capable to identify such price manipulation. Additionally if they wanted to manipulate the price now. Now is the right time, since the value of share price is below book. They have not been buying the shares.

Also, while their profit growth before tax has been impressive through covid any idea why their profit growth after tax is nearly 3X? They are getting some huge tax benefits. Any idea how long this will last?

I haven’t checked the tax aspect. Will have to check it out

As per shareholding data, Promoters have no skin in the game . They are only holding 2.8% of shares while retailers are bag-holding with more that 80% of shares. isn’t it a red flag?

There is another way to look at alignment of interest. This is to ensure that a significant portion of his individual networth is invested in that 2.8% that he owns. My guess is that the PE investors would have ensured some form of alignment of interest. Nobody lets you play with their money with no alignment of interest

Its virtually impossible to build a meaningful position here and requires a strategy unto itself. For eg for my friend to just buy 500 shares near or under Rs. 100 took him a total of 6 months so I dread the thought of even starting a position here.

I have built a position equivalent to ~10% of my networth within 4-5 trading sessions (across a 2 month period). I bought share from late 90s to early 110s. On average there are atleast 4,000-10,000 shares available daily (although the spread is high).

I primarily used limit order to build a position. Sharing a link below, which I found quite useful


Hey Rushil,

From their recent credit rating report May 05, 2021 (Page 6)

"As per the asset liability management (ALM) statement dated March 31, 2021 (Provisional), Ugro has positive cumulative mismatch in all of its maturity buckets. The company has unencumbered cash and cash equivalents of ~Rs. 338.89 Cr. as on March 31, 2021. The company is adequately capitalised with networth of Rs. 950.46 Cr. coupled with a gearing of 0.58 times as on December 31, 2020. The company’s high capitalisation levels provides high flexibility to raise additional borrowings. It also has the flexibility to raise funds through securitisation transactions. The company has plans to maintain adequate liquidity in the form of unencumbered bank deposits/balances, liquid funds or unutilised bank lines to cover three months of requirements "

Source -


At today’s market cap of INR 729 Cr, you are effectively getting INR 339 Cr of cash + INR ~1,100 Loan AUM + Technology + Team;

Adjusted Price to Book (excluding the unused cash on book of INR 339 Cr) would be (729-339)/(950-339) = ~0.60x


Hi Admantium - Great work on this company, thanks a lot!

Wanted to get your views on the CEO resignation a couple of months back - do you think that’s a red flag?

Hi @Arpit_L ,

I personally don’t think it is a red flag. Have two reasons for my belief -

a. The recent notification on exchange stated that the CEO Abhijit Ghosh is leaving for “better career prospects”

b. Prior to 3 years in Ugro, Abhijit worked in Religare for 11+ years (under Shachindra). The top management of Religare (SME team) followed Sachindra when he set up Ugro. I would not personally follow my boss, especially if I felt there was an ethical issue

The second point is purely my conjecture. I can be wrong. However, CEO leaving a company for better prospects is quite common.

Great explaination since starting this thread. I am also watching this company for two months. In addition to pouring money by investors, I was attracted by the statement of Shachindra that he has built a team of finest people from industry, most of these are from Religare. They are taking salary just to survive.Everybody is invested here, and given stocks. So all management team’s interests are aligned with the succes of company. Time deadline is 2025. Everybody is working hard to make it succeed and this will be their salary, incentive. This was the reason I also invested.

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I have gone through all the posts till bottom, I must thank you for the effort you have taken for introducing an interesting company, in normal course I wouldn’t have found it.
My question is more abstract, there is a general fear that banks and NBFCs have increased risk due to 2nd wave of pandemic. Your views please?

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Il take a stab at answering that @jyothi. The problem with nbfcs is their legacy book. Most of the listed nbfcs got absolutely destroyed from 2017 onwards and they’ve been cleaning up their books since then. Covid came in and slowed that process even more. Many of them were leveraged to their max too and now they have to de evolve to evolve basically. So apart from a few like bajaj finance and Muthoot most of them are in firefighting mode. They are trying to digitalise in order to improve their position in the future but this will take a lot of time. Then you have a company like ugro. They started off when most of the fires were done with already so they have no books to clean. They started off with 920 crores of capital and without debt so they aren’t in an existential crisis. In fact their gearing is at just 0.59 times now vs most nbfcs at nearly 3 to 4 times. This gives them a comfortable crar of 78 percent too! They also began with tech and are building from that rather than what the other nbfcs are doing which is moving towards tech and digitization from their older methods. This is the reason why ugro managed to continue showing profits even through covid. So they are comfortably placed right now and are arguable the safest listed lending company in the stock markets due to this unique position. Now imagine what they can do from here… They can slowly increase their debt while everyone else is surviving from 0.59 to 3.8 which is their target. They don’t need to apply for qips and dilute their book to survive. They have a comfortable amount of cash and can expand safely too. And all this with a core tech approach. Once you look past the liquidity risk this is really the safest lending company I’ve seen and I believe they could actually reach the size they say they could in 5 years just due to how they are currently placed. Unlike other small nbfcs which are cheap due to the existential threat that they carry, ugro is cheap due to execution risk ie can they actually do what they say and scale since they are basically a startup that began disbursing 2 years ago…
I do want to bet on this space since I see nbfcs having a good run ahead of them though I’d rather either pay a premium and go with the likes of bajaj Or
pay cheap for execution risks with ugro
but wouldn’t want to pay cheap for turnaround stories with a real danger of disappearing altogether. Considering this sector is so risky I’d rather pay the least amount for a chance of the biggest upside here than pay higher amounts and take on high risk with lower upsides… And the upside here is huge if one’s horizon is about 5 years.

Disc: after months of back and forth I’ve begun investing as of today thanks to this thread which pushed me over the edge and made me re look it. Will be allocating a max of 2 percent of my PF and not more due the nature of the instrument. Not a sebi advisor.


Let me just elaborate a bit on execution risk in the post above since I just threw the term in passing above and did not highlight what the risks are:

  1. We have no idea how they’ll handle scaling up:
    As of now they are in this comfort zone of lending with just 0.59 leverage. As they gear up to higher levels the risk will rise and their balance sheet may see some stress.

  2. Dependance on tech:
    Pre covid their npa levels were better than most in the industry and even during covid they were fantastic. However, whenever tech is used in such a big manner for underwriting there is always a risk that npas could blow up as more and more customers are on boarded. However, they seem to be very confident regarding their system and only lend to select sectors and even filed a patent for its underwriting model
    U GRO Capital seeks patent for its scorecard based underwriting model
    So there could be a moat brewing here if their tech holds with scale.

  3. Is the company really cheap?
    They currently hit profits of 3 to 4 crores pre tax per quarter. They are getting huge tax refunds which take their profits higher which won’t last forever. So this needs to be kept in mind. Its fantastic that they have managed to get profitable so quickly but since they’ve taken a lot of opex upfront they need to balance growth with maintaining quality of book while still just scraping through with profits. So on a profits basis their run rate is currently around 12 crores per year under normal tax rates. That shows how small they are currently and how far they need to go to become even a mid size lender and how risky this investment is. Also though its not wise to look at a financial company on a PE basis they would suddenly look very expensive earnings per share wise when their tax returns to normal so that needs to be kept in mind. All of their metrics ie roe/roa etc will continue looking horrible for a few years until a certain scale is reached since they are starting off with so much capital and have front loaded so many costs. They are currently value at 4.5 times interest income. However, on book value basis they look cheap since their assets far out weigh liabilities but on actual performance wise only a year or two would show us how quickly this book value can increase since it will take a lot to move the ticker book wise given the huge starting point its begun from.

  4. Covid 2 and 3: While they have ambitious targets for 5 years from now I wouldn’t mind if they delayed this by a year or two due to covid. Their gnpas went up during covid and there is a danger that if they try to grow too fast during this period they may continue going higher. That being said they are better placed than most with low leverage so this may not be a big issue and may in fact act as a good test for their underwriting tech.

  5. The illiquidity and ownership structure:
    It takes a lot of faith in the management and market participants to assume there was no mal intent meant with the promoter structure. Companies with such low free float do have problems with manipulations. However the intent behind this structure has been explaining above and by management and one needs to take a call for themselves regards whether they are comfortable or not. Regards Liquidity, it would be an issue for large institutions but not for retailers by the looks of it. While the spread is High overall the prices are stable during the day and apart from an errant share or two being sold at huge extremes most are bought and sold within range. For eg The 52 week low of Rs. 70 was just a few shares that traded at that price(just yesterday 1 share traded at 85 Rs!) … The bottom looks closer to the 85 to 90 range so at cmp we are very close to it.

  6. Opportunity cost:
    An investment here is money forgotten for 5 years at least. At the end of the day this a profit making listed startup but a startup nonetheless. The business is barely a year old and may take a couple years for the market to even value it properly. So entering with short time frames here will not work. That being said if the management continues to walk the talk at 68 percent cagr and controls npas there could be a frenzy which could give returns in a shorter time frame here so timing the market isn’t something I’d recommend especially with a stock with such low free float.

  7. The sectoral risk:
    While nbfcs have the potential to create life changing wealth they can also be huge wealth destroyers in the best of times. Their cost of borrowing is something to keep an eye on. For a company so new it’s decreased surprisingly quickly to 10 odd percent which is fantastic. We need to keep an eye on If they can keep this constant/continue decreasing it.
    They currently have a lot of cash that acts as a huge safety buffer but if they expand too fast they could burn through it. So we also need to Keep an eye on their costs which are pretty high at present.

Overall, one really needs to bet on the jockey here ie Shachindra Nath and his management team(the same way the PE firms are currently) and the skin in the game they have with their company ownership and whether they can scale the company from nothing to a 20000 aum company in 2025. Its very rare a retailer gets to participate from the ground floor with a company… But this is that one instance. Usually we would be coming in during an ipo when the price would favor the exiting owners… Here we get to enter at under the valuations paid by the founders(the PE firms) so there isn’t a question of overpaying here which gives comfort in itself and if management do even half of what they’ve said they will do(and they’ve walked the talk for a year now) we could be the ones exiting at stupendously high valuations in 5+ years in a faux ipo as liquidity and coverage of the stock increases lol.

Thanks again to @Admantium for inititiating this thread on what really looks like a fantastic business opportunity. This is the closest most of us could get to actually starting our own financial institute from the ground up and will be a good lesson in the financial markets if nothing else. Cheers.

Disc: I am invested. I am not a sebi advisor. Not buy or sell recommendations. Please do your own due diligence before investing.


I think this is bit similar business like lenden club and what i found is that initial npas were about to 2 to 3 percent but when their book grew with lax lending standards the npas skyrocketed above 10percent

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That’s my main worry with ugro. With great scale comes great responsibility… with handling npas. However, What gives me comfort is the strategic sectors ugro targets ie consumption based. Its kept them on good footing through covid too. Also, their underwriting process is supposed to really be spectacular. The friend of mine who invested in them a while back works in bfsi and heard about their underwriting process through a strategic tie up with his company. He began a position soon after. Maybe starting with a fresh pair of eyes post the liquidity crisis at the tail end of the last decade has helped them crack the npa model. They were learning lessons and creating a tech based model to create a book while most were repairing theirs. Pre covid they had less than 0.1 gnpa which is unheard of(though on a low lending base). Even during covid and post them getting a reasonable amount of disbursals their gnpas and npas are better than most small nbfcs. I’m willing to bet a small percent of my portfolio since IF they do manage to scale without compromising their book too much ie maintaining at least under 2 percent gnpa post covid then I really can’t even comprehend where they’ll be 10 years from now. I keep telling myself that A whole host of religare staff wouldn’t leave for a pipe dream.
I’m not too sure about lenden club but don’t think it’s a direct comparison since they are an all weather p2p lender. Last I heard their npas had settled and come under 4 percent too

Disc: I am invested. I am not a sebi advisor. Not buy or sell recommendations. Please do your own due diligence before investing.


Yes thats right…lendenclub is more on P2P lending while these guys target SMEs.
I think they are more at part with lending kart. My cousin use to work in lending kart and got to know they burned alot of cash and high NPA.So i believe role of management and their lending criteria is key here as you suggested.Have a look at their website

Another key differentiating factor is that ugro also has physical points for disbursals and collections. So there is a follow up check done personally which adds another layer to decrease Risk. The underwriting tech helps them identify clients faster and approve within 24 hours but there is a human touch involved too. They also indulge in cross lending so they are pretty well diversified. In fact their pure play digital platform for lending isn’t even out yet and has been on hold and will release next year directly and hopefully they use what they learn to create a safe platform(I am a bit wary of this platform tbh since I don’t know what the human element will be… But its still a while away from Release) . I think being listed makes them even more careful with how they spend cash since they have to answer for it every quarter. Imo they are doing things the right way and are really trying to build something generational here. The likes of lendingkart etc are just building in order to sell at higher valuations and even with all their issues are still getting funded at higher and higher valuations. I personally have a lot of confidence regards ugro and feel they’ve set and are setting themselves up as well as anyone could in this minefield of a sector

Disc: I am invested. I am not a sebi advisor. Not buy or sell recommendations. Please do your own due diligence before investing.


Thanks for bringing this co. to the forum’s attention. This is probably a really good company if someone wants to invest in a Fintech run by experienced NBFC personnel and is more like a Private Equity style Investment.
I went through the company’s presentations and investor calls. Looks like the management pretty much knows what to do and clearly have a goal.
Since they’re focused on MSMEs, ofcourse it is going to be a high risk business with NPAs shooting up with time. Also, since their underwriting is purely digital based, it’ll take time to know how well it works to mitigate risk. It is pretty good to see that the Management isn’t way too much aggressive in growing which would give them time to make changes to their underwriting methods as they keep on getting better data. As @Malkd pointed out, one big advantage for Ugro would be that they wouldn’t be busy clearing out the mess other NBFCs have been facing since 2018.
I have one question if someone could answer it or could guide me where to find it…
As per one of the presentations, the credit market opportunity is worth $600 bn and they aim to be 1% of it. Any clue about the opportunity in the 8 particular sectors & subsectors that they’ve shortlisted among the 180 odd sectors and are lending to? Also, this is a pretty naive question but would they add more sectors to that list once they feel their criterias are somewhat being fulfilled?
My point here is, if the opportunity of the sectors they’ve shortlisted is ~$10bn and if they intend to be ~1% (as mentioned by them) of the total market i.e - $6bn, they’re aiming to be the #1 player in that with over 50% market which I feel would be quite difficult to achieve. However, this is for a later stage. For now, it looks like the company is going to go through a good couple of years. The institutional holding surely gives confidence to get some and hold on for a good journey.


By the looks of it they are trying to grow to a stable base and hence why they are targeting these sectors . Once a few years pass and growth stalls and their underwriting tech proves that it can control npas even with scale they’ll probably pivot to other sectors. Just this first 5 year journey will be a long one though. As investors we ll just need to look at the next 5 years and ensure that YOY they hit the targets they talk about and then set new goals. We ll get to know management better too over the next 5 years and will know their thought process and capability better. It’s such a new company that
I’m revisiting my thesis almost everyday to make sure I dint miss anything and this doesn’t go by the way of stampede capital (so far everything looks real and I’ve found no red flags but diligence is a must) :slight_smile:

Disc: I am invested. I am not a sebi advisor. Not buy or sell recommendations. Please do your own due diligence before investing.