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

They do secure lending to SMEs at ~14%. Which is actually aligned with market range. My family being once part of the informal lending system can say that these kind of yields are actually inline.

Even today, good businesses do not mind taking credit at 12-15% range in cash (& goes unaccounted from formal P&L reporting). Now for credit taken from likes of Ugro, the interest expenses becomes part of formal P&L and hence net-net beneficial for the debtor (vis-a-vis informal loan).

Usually in any sector, whenever informal and formal competes, formal business suffers because of compliance, tax costs etc. Herein, UGRO is competing head-on with informal lenders & this makes it a unique proposition for them (they just need to keep their asset quality, credit cost in control).

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Detailed Peer Comparison by Centrum

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I attend exhibitions and trade shows and I have come across Ugro as a participant in some of them.

Latest being IMTEX in Bangalore next month:

Looking for borrowers for machinery and equipment

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Strong Quarterly growth update from Ugro, However fluctuations in collection efficiency remain baffling as always…

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While a lot of technology & personnel cost is front loaded for Ugro, they seem to be still struggling with the key capability of collections. Ultimately lending is an easy business, it is the collection muscle that will separate a leader from the rest.

Disc: Sold out

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As already told collection need to be seen with resolution bucket…: even 80 percent collection with 95 percent resolution is fine…

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Ugro Capital’s management, expressing confidence in asset quality, positions the company for potential rerating and significant wealth creation.

The assertion aligns with the current growth trajectory, indicating a positive outlook for the company’s financial health. Should the management successfully execute their strategy and maintain robust asset quality, this accomplishment could pave the way for enhanced investor confidence, potentially resulting in a rerating of Ugro Capital’s valuation. Such a rerating has the potential to generate substantial wealth for investors who align with the company’s growth narrative.

However, it is essential for investors to closely monitor the company’s performance and market dynamics for a comprehensive understanding of the evolving scenario.

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Ugro capital has touched 200 DMA today. Correction was with low volume so indicating not much worry on technical front.

But recently company has started updating events and disclosure via whatsapp. I would take it as a red flag as when a company over emphasised its achievement to retail shareholders, “dal me kuch to kala hai…”

I want to know boarders view on that. Are there any other companies doing so? Is it a normal trend?

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I don’t see it as a red flag. The more disclosure a company does, the better it is for shareholders.

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I don’t see it as a red flag either. On the contrary, I like the fact that they are being pro-active in keeping us in the loop by providing all the key updates and happenings. If I look at the last few messages i received, they talk about 1. Launch of MSME Sampark - which has details of how the MSME ecosystem is evolving 2. Impact analysis of the interim budget 3. Confirmation about raising 250 crores through NCDs 4. Earnings report 5. Press release of Q3 FY24

Maybe what we can watch out for is, see if they will continue to send all information, even bad news, with the same enthusiasm and transparency. If they do, this is a good move.

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Chief Operating Officer resigns. High level exits are big red flags in finance companies.

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I don’t think any of them is accurate. I searched for a few names and couldn’t find any of them related to the company.

Neelesh Choukesy - PPFAS (I have invested in this for quite some. Never heard of a person called Neelesh)
Anil Talreja - Edelweiss (No such person existed or resigned)
Jaideep Goswami - AU Small Finance Bank (Same here).

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Thanks, error was due to info taken from bard ai…deleting it…