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

Stock Opportunities Untested - but worth a good look
642

RBI might not have formal norms for APR but this point has been raised multiple times during their audits per my discussions with NBFCs.

I was actually benchmarking all the new age personal loan companies and tried taking loans with top 5-10 players. A lot of these NBFCs engage in loan originations or co-lending through partners like Kissht, Moneyview where you can find the absurd APRs being charged.

Do note that APR isn’t interest rate, it’s calculated using interest rate + processing fee + insurance fees and any other cost being charged upfront before taking a loan.

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643

Todays announcement of the Patni family office taking a 5% stake as a long term investment is again an example of what i feel management is doing incorrectly.. (although they dont have a choice of aaying no to a public buyer). The day we see mutual funds in the list of shareholders is when the price will stabilize and start going up as more fubds try to replicate each others portfolios. The company is still behaving like an unlisted company from a shareholding perspective…i sold a chunk for tax loss harvesting yesterday and again that had nothing to do with company fundamentals…

644

Following the discussion on loan book quality here with interest. Want to add one angle that hasn’t been discussed yet — the Profectus Capital merger timeline.

Background for those who missed it: Ugro acquired Profectus Capital for ₹1,400Cr in an all-cash deal. RBI approved the acquisition on September 17, 2025. The merger effective date was targeted at April 1, 2026 — which is this week.

Three things worth checking on public records:

1. Has the NCLT merger application been filed? This would appear on the NCLT Mumbai cause list — searchable at nclt.gov.in. A merger of this size requires NCLT approval and the application should be visible if filed.

2. The rights issue in June 2025 was subscribed at only 0.88x. A sub-1x rights issue on a ₹400Cr raise is worth noting — it means existing shareholders were not fully convinced at ₹162/share. Stock is now at ₹91.

3. Total impaired assets were ₹522.97Cr as of FY25 per the Acuité rating report, with ₹243Cr of repossessed assets held for sale. Post-merger, the combined impaired asset picture is worth tracking.

Not a bearish call — just flagging that the merger completion timeline and the NCLT filing status are checkable from public data. Has anyone looked at the NCLT cause list for this?

Not holding. Tracking from a regulatory research perspective.

645

Its interesting you talk about NCLT. But it seems company already had done some business movement at console level. I think moved co-lending at Profectus level. is it possible without NCLT approval?

I note that company is raising CPs left right and centre. Recent one at 9% yield shows extreme liquidity pressure on the firm.

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646

Good observations on both points. Let me add some data from public filings.

On the NCLT / co-lending question:

Ugro completed the Profectus acquisition in December 2025, making it a wholly-owned subsidiary. The board explicitly stated both entities would operate independently until the formal merger scheme is approved. RBI No Objection for the amalgamation came only on February 25, 2026 — so the NCLT petition would have been filed after that.

Genuine question for those who know NBFC regulations better — does operational co-lending integration at wholly-owned subsidiary level require NCLT sanction, or only the formal amalgamation does? Would help clarify whether what’s happening at Profectus level is ahead of regulatory approval or within permitted bounds.

On the CP issuances — this is the more interesting data:

From BSE Regulation 30 filings in chronological order:

  • CP borrowing limit raised from ₹500 crore to ₹800 crore — January 8, 2026

  • ₹20 crore CPs, 90-day tenure — February 26

  • ₹14.67 crore CPs, 90-day tenure — March 20

  • ₹25 crore CPs, 13-day tenure — March 24

  • ₹181 crore NCDs allotted March 27, including subordinated unsecured at 13.25%

The 13-day CP is what stands out. Normal working capital CPs run 30-90 days. A 13-day paper suggests bridging a specific near-term obligation rather than routine liquidity management. Combined with 13.25% on subordinated NCDs and the CP limit being raised to ₹800 crore, the liability side is becoming both more expensive and shorter in duration simultaneously.

CareEdge had noted AUM growth was deliberately slowed in H1FY26 to preserve liquidity for the Profectus acquisition. Post-acquisition they now need to grow again while simultaneously integrating Profectus, digesting the MyShubhLife acquisition, and managing the NCLT merger process. That is significant balance sheet activity happening at the same time.

Not a red flag in isolation — NBFCs routinely use CPs. But the tenor shortening and cost escalation together are worth watching in Q4FY26 results.

Has anyone looked at the ALM statement they filed in January? Would give a cleaner picture of the near-term liability maturity profile.

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647

you missed 9-day tenured CP on 30th March. I note an extreme liquidity pressure as yield is 9% vs. 6-8% norm for A1+ rated issuers. Or company is wrongly rated at A1+.

On the cost escalation - 12.5% upfront interest on CCDs and 12.5% additional for those who lapsed warrants last time puts overall cost just from CCD over 200cr.

Company’s shareholder’s are notorious in not announcing things on time - last time Samena, now Patni group. Also I could not find announcement of covenant breach on exchanges.

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649

Adding to the discussion with data compiled entirely from BSE and NSE public filings over the last 90 days. Posting this as a structured data point rather than a conclusion — would welcome pushback or corrections from anyone with more context.

The debt issuance sequence — January to March 2026

Pulling together every allotment filing from BSE Regulation 30 disclosures:

  • Jan 8 — CP borrowing limit raised from ₹500Cr to ₹800Cr

  • Feb 25 — ₹50Cr CPs allotted

  • Feb 26 — ₹20Cr CPs, 90-day tenure, annualised yield ~8.9%

  • Mar 18 — ₹45Cr NCDs, 13-month tenure, 9.50%

  • Mar 20 — ₹14.67Cr CPs, 90-day tenure

  • Mar 24 — ₹25Cr CPs, 13-day tenure, annualised yield ~8.8-9%

  • Mar 27 — ₹181.10Cr NCDs: ₹46.10Cr subordinated unsecured at 13.25%, ₹135Cr senior secured at 9.50%

  • Mar 27 — USD 20 million foreign currency bonds at SOFR+300bps, 48-month tenure

  • Mar 31 — ₹50Cr CPs, 49-day tenure

Seven separate tranches. Four different instruments. Approximately ₹670Cr equivalent raised in 90 days, with a further ₹1,467Cr CP programme approved maturing June 18, 2026.

The tenor compression within March is directional

90-day on March 20 → 13-day on March 24 → 49-day on March 31. The 13-day paper on March 24 stands out. Normal working capital CPs run 30-90 days. A 13-day paper issued between two longer-tenor papers suggests bridging a specific near-term obligation rather than routine liquidity management.

The yield question on CPs

March 24 CP from BSE filing: issue price ₹4,98,438 against face value ₹5,00,000 over 13 days. Annualised yield works out to approximately 8.8-9%. For an A1+ rated issuer the market rate is 6.5-7.5%. That is 130-200 bps above peers. Either the market is pricing credit stress the rating does not yet reflect, or the A1+ needs revisiting.

What the secondary market is already saying

BSE’s listed debt page for UGROCAP shows existing NCDs trading at secondary market YTMs of 14.49% to 18.74% today. The company is simultaneously issuing new CPs claiming an A1+ rating. When secondary market participants are demanding 14-18% on existing listed debt, the divergence from the primary CP yield of ~9% is material. One of these is wrong.

All recent CPs are unlisted — this matters

Every CP allotment filing explicitly states the papers are unlisted. Listed CPs trade on BSE and their secondary market prices would be publicly visible — just like the NCD YTMs above. Unlisted CPs avoid that transparency. The primary yield disclosed in allotment filings is the issue price discount. The actual negotiated yield between UGRO and the CP buyer in a private transaction is not publicly visible. Given what the listed NCD secondary market is saying, the question of what private CP buyers are actually demanding is worth asking.

The refinancing wall

The ₹1,467Cr CP programme matures June 18, 2026. Add NCD maturities falling in the same window. Q4FY26 results will be announced right as this refinancing executes. If asset quality shows any deterioration in Q4 — even modest — the cost of rolling that paper increases at precisely the wrong moment.

The rights issue context

The June 2025 rights issue at ₹162 was subscribed at only 0.88x. Existing shareholders did not want the stock at ₹162 even on a rights basis. Stock is now ₹88. Anyone who subscribed is down 46% in nine months. The company then needed CCDs anyway to fund Profectus. The undersubscription was a clear signal at the time that the broader shareholder base had doubts that were not being surfaced clearly.

Promoter holding context

The registered promoter entity — Poshika Advisory Services LLP — holds approximately 2.18% of the company. For a founder-led NBFC this is an unusually low promoter stake. Today BSE received a fresh Regulation 29(2) SAST filing from Poshika Financial Ecosystems Pvt Ltd — a related Poshika entity. I was unable to open the PDF to determine whether this represents an acquisition or disposal. Can anyone confirm what that filing says? If it is a further disposal at current prices, that is a data point worth discussing alongside everything else above.

On the ALM mismatch

13-day CPs funding 24-48 month MSME loans means the paper needs to be rolled repeatedly over the life of the underlying assets. One failed rollover creates an immediate liquidity event. This is not a theoretical risk — it is the early stress pattern of every NBFC that has faced difficulties. The January 2026 ALM statement was filed on BSE. Has anyone actually read it? That document would give the clearest picture of the near-term liability maturity profile.

On total cost of capital

The CCD structure carries a coupon of 12% per annum per the BSE postal ballot document. Add the headline NCD rates of 9.5% and 13.25%, the foreign currency bonds at SOFR+300, and the CP yield of ~9%. The blended cost of this liability stack is materially higher than what NIM figures in Q3FY26 already reflected. Q4 spread income is worth watching carefully.

On disclosure behaviour — a genuine question

I could not find a covenant breach or lender waiver announcement on BSE exchanges. If any such waiver was obtained in connection with recent borrowings it would be a Regulation 30 disclosable event. Has anyone found such a filing? Asking genuinely — happy to be corrected.

One more observation

BSE itself has flagged on the UGROCAP quote page today: “High low price variation was greater than 75% in previous 3 months.” This is BSE’s own surveillance system flagging abnormal price behaviour — not an analyst opinion.

All data points above are sourced from BSE Regulation 30 allotment filings, BSE debt page, and BSE quote page. Everything is publicly verifiable. Not holding. Would welcome any corrections or additional context from those tracking this more closely.

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650

I am not sure which AI model you are using to generate the above slop (given the high number of em-dashes) but i would prefer you would address the hallunications before using it further for doing analysis. Any human can read the image and say it’s a “acquisition” by Poshika Advisory.

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The “unusual low promoter stake” flagged by your AI model is due to insufficient “context” it has. Ugro has always been majorly held by private equity firms with very low promoter stake.

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651

Finally some human i can respond to. I wrote my answer yesterday to Riddhi and found the excessive hypenated overr researched content in their other posts and figured i could chat with AI on my personal screen.

If u have questions about the CP issuance the investor relationship team is answering any emails sent to them.

Cheers

652

Fair point and you are right, the Regulation 29(2) filing is an acquisition by Poshika Advisory, not a disposal. I should have read it more carefully before posting. I am withdrawing that paragraph.

The rest of the data like the debt issuance sequence, CP yields, secondary market NCD YTMs at 14-18%, rights issue undersubscription, and BSE surveillance flag is sourced directly from BSE filings and the BSE quote page. Happy to be challenged on any of those specific numbers.

I did use AI to help structure and phrase the post. The underlying data I pulled myself from BSE filings the CP allotment disclosures, issue prices, NCD rates, secondary market YTMs from the debt page. AI helped me write it up clearly, not find the numbers.

653

I trust my readings of investment classics, and it says, a promoter may sell shares for any nunber of reasons but will only buy if they think the share is undervalued….

Just on the rights issue, the rights issue was not even on the plan initially. They were supposed to do an all out CCD. The rights issue was planned only after shareholders wrote to the management to be fair to existing shareholders and keep them as involved as the ccd reprice… so the management did the 400 cr rights. They also reduced the CCD and raised tier 2 capital to avoid further equity dilution.

654

Fair points on the rights issue context and the promoter buying both are more nuanced than I initially framed them.

One thing I am still sitting with that nobody has addressed, the listed NCD secondary market YTMs. BSE’s debt page shows existing UGRO NCDs trading at 14.49% to 18.74% today. The company is simultaneously issuing new CPs at ~9% with an A1+ rating.

How do you reconcile those two numbers? Either the secondary market is wrong, or the A1+ is stale. Genuinely curious how others are thinking about this, not making a claim, just cannot square the circle.

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655

The mkt price to book is unusually low at 0.5

656

Good news and good price simultaneously comes rarely… low liquidity has caused this price destruction and if any ine have patience this can be an opportunity. Just 10 lac shate traded on 30 th march cause 10 percent price fall .i had earlier earned from this and bought it again this time not at 82 but at 91… one have hardly to lose when buying at .5 p/b … now its upto managment to increse roe upto 10 percent this year and 14/15 next year and pray that mkt give some value to this. Ugro since inception has raised 3000 cr and with no quarter of loss in last 5 year is valued today at 1500 cr , the price they paid for profectus and msl….either there something very wrong or mkt is very wrong to bring this at this price…. I was not interested in this but the price and promoter buying enticed me…the only problem i felt in this was their rapid expansion caused all the ratios to be screwed up but now they have stopped expansion ,started closing branches and focussed on higher yeild loan may start showing from this quarter onward

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657

Not directly related to Ugro Capital, but a nice article which talks about the reforms Indian MSME sector badly needs

658

Excellent results posted by the company. Usually when the stock price drops drastically, companies declare their worst possible results as the damage is already done and it is better to wash all dirty laundry at one go. seems like that isnt the case. I was worried if the management would take that opportunity to release really bad results (additional provisions etc for future use in the P&L, which is usually the case at many places). Either they didnt think that way or they genuinely are a management who know how to run the business but dont know how to manage the stock market.

The traction is visible and the direction is right, speed can come later.

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659

One thing I must thank the management is sending qtr results directly to shareholders. This the company is doing for more than a year, which is good. Having said that, let me express my disappointment on poor disbursement figure of 1% yoy. Why it is so poor? When company is showing good growth in AUM, how can there be no growth in disbursement yoy?

660

They mwntioned that they havve stopped disbursement on their business loans and intermediated loans… only 2 businesses going forward the EM and embedded finance. I am even surprised it didnt gondown. I expect it to go down in the near future as those loans were bigger in size too.

Also pls be prepared for a very low increase in AUM without equity raise. Mathematically if they dont increase leverage aum can only increase at the roe level which is 8%.

The mix will be better. The intermediated loans cost them 2 to 4% to originate and were low margins… now they will self originate and have higher margins.

661

Now aum growth don’t matter it is profitibilty that has to be inproved , they have more aum than five star , sbfc and mas but with pathetic roe. This quarter they have reached adjusted roe of 7.9 percent . This has to inch toward 10/11 percent by the year end. Aum should increase only after roe expansion. Aum might increase 10 percent for next two year. Too mich diluation has taken place which needs to be taken care of. Given a Time Machine i dont think management would have increased branches so aggressivly

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662

Promotor buying trend continues

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Now upto 2021 levels.

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Disc: invested

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