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

The takeaway from this article gives us another KPI for Ugro:

For their targets of 18.8% RoE, at the current loan yield of 15.7%, they need ~30% of their AUM to come from co-lending. (Depending on assumptions made about leverage and loan yields) Let’s ask how their loan book has evolved in the last 15 months.

Date AUM(Cr.) Co-Lending %
30/09/2020 979 14.40%
31/10/2020 1024 13.18%
30/11/2020 1072 12.13%
31/12/2020 1128 12.23%
31/01/2021 1171 11.78%
28/02/2021 1231 12.43%
31/03/2021 1317 12.91%
30/04/2021 1307 13.31%
31/05/2021 1299 13.70%
30/06/2021 1375 15.93%
31/07/2021 1564 19.31%
31/08/2021 1729 19.66%
30/09/2021 1932 19.31%
31/10/2021 2140 19.44%
30/11/2021 2335 19.44%
31/12/2021 2590 20.23%
  • Mr. Nath tells us that 50% of the disbursements in FY23 are expected to be through co-lending. This needs to play out for the thesis to remain intact. The bear case is them falling short of the target AUM, falling short of the 30% mark, and needing higher % of book to be under co-lending should the loan yields drop to sub 15%.

  • My assumption is 100% of the partnership channel is co-lending from banks. In reality, it’s blended with their co-lending partnerships with fintechs like Kinara. Therefore, depending on how much % the banks actually take up (my guess is >80%), the % of book under co-lending correspondingly needs to be higher.


D: Invested.

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