Trend of interesting disclosures continue. Rectified disclosures, resignations.
I am looking at rating agencies for further cues.
Colending yield at 32% and company portfolio yield is 18%. Is there any other company with colending rate of 32%.
I think that might be due to their own portion only included in denominator. But any other company with similar disclosures will be interesting to compare.
Yep deleted the post above as i found the document you are refering to.
So yea in the 240 cr disbursed (including partner component) assunin ugto did 20% it is 48cr. 32 % is 16 cr. If u assume 48cr at 13% it is about 6cr and fees for originating of 1% = 2.4 cr and the interest differential of 4% on 240 cr = 9.6 cr over 3 to 5 years which needs to be npvâed. It is roughly 15 cr. Npv. Approximately 30% for the first year seems fine (also note that the differential of 7 cr is the npv and realised as pnl now but for capital calculation as mentioned by management it is realised over the term of the loan). This is precisely the problem they had with the previous business model.
Management did this previously, thinking that showing higher P&L would give them a good P/E ratio and keep increasing the stock price. They could dilute at higher and higher prices to keep this going. What they have now realised is that the market is not giving them the benefit for this model. They are being forced to dilute at lower stock prices and this is the reason why they have changed the business model to do less of colending.
What the hell happened at Agm, it seems people have lost confidence in management. To approve mr nath as md only 55 percent voted yes and resolution to increase pay was defeated.. donât know wether md can continue if they donât have trust
Any take on results for Q1 fy27. What was the expectation as to their performance from your perspective?
Would love to hear your thoughts!
Ugro has been my darling investment that has just given me irritation but no return 
. If they had had a good parent, the situation would have been very different for them. Still I am positive about the company as a whole and what they are trying to build in long term.
https://www.bseindia.com/xml-data/corpfiling/AttachLive/013e163c-2e38-43b9-af81-99ad0566e334.pdf
Roa is inflated due to pat increase due to tax reversal i think , other wise ebidta increase is 30 percent hence if orginal tax was take it would be 2.5-2.6 percent , same case with roe but directionally moving toward double digit by this year end. Only concern is if they donât grow aum the embedded finance gnpa would start reflecting in books. Rest what could go more wrong at .5 p/b hope it start moving toward book value atleast
Itâs one of my biggest investments too. In fact I was wondering the same thing, as to why donât they just sell down that portfolio to institutions with better cost of borrowing who would also like to increase their book size?
I think with the colending part it may not be obvious to sell large chunks of that book without the partner agreement or something like that.
The direction is good and the management has definitely understood that the market is not valuing them. Recent purchase by the MD is good to see. He does not have deep pockets so whatever he is buying is a meaningful part of his wealth.
If the portfolio were only what they bought from Profectus, + the embedded finance and the emerging markets, for an AUM size of 9,000 crores, they should trade at at least 0.5 times AUM, as the book would yield north of 18%.
Very well done on the cost optimisation. Also remember that they took a 25 crore charge last quarter, which they have mentioned will come back into the P/L someday.
FY27 should be at least 300 crore profit at even 10 P/E, which should be around âš300.
I also reckon that FY27 profit will be around 300cr.
Nevertheless, I would rather predict tomorrows weather than a stock price. The weather has disappointed me less.
Itâs quite sadâŚnot the Q1FY27 result, but the broader unfolding. Iâm not going to comment on the Quarter result. But do want to mention that I had exited around 80-85% of my Ugro shares in early 2026. I thought I would hold for 8-10 years. I normally have a LOT of patience and give my investments a long rope. I have seen (and myself experienced) big money being made if one holds a good investment for more than one cycle. I have the patience to hold stocks over more than one cycle (I mentally accept a cycle to last as long as 8 years. So I have the patience to hold a stock for 15+ years).
Why did I sell over 80% of my shares then? Too many little and some not-so-little things started bothering me. These include:
All of this led me to offload a large part of my holdings, though I had originally prepared myself to hold for 8-10 years - and in spite of my patience. I still hold some shares and track the company.
Also putting down below AI output from my querying on the flip-flops by the company. I think it reflects my thoughts well.
**************************************************************************************************************
Tracking Ugro Capitalâs investor presentations and annual reports from its inception in 2018 through its latest Q1 FY27 filings reveals a company that has fundamentally altered its core identity multiple times to appease the market.
Whenever a strategy failed to generate the promised returns or scale, management effectively discarded it, adopting a new overarching narrative.
The DataTech Era
2018â2020
The Pitch: Ugro was founded on the premise that MSME credit is a âdata problem,â not a credit risk problem. They pitched an automated, branch-light model driven by their proprietary âGRO Score,â using GST and banking data to instantly approve loans.
The Pivot: Algorithmic lending struggled to scale in Tier 2 and Tier 3 markets, where micro-businesses operate heavily in cash. Management quietly acknowledged that physical branches and human collections were mandatory, shifting away from their tech-only narrative toward traditional, high-touch operations.
The Co-Lending Middleman
2021â2023
The Pitch: Ugro rebranded as a âLending-as-a-Serviceâ (LaaS) platform. Through the âGRO Xstreamâ platform, they promised an âasset-lightâ model where they would originate loans and pass up to 80% of the risk to large PSU banks, generating high returns on equity.
The Pivot: Despite pitching an asset-light, fee-driven model, funding their 20% share of the loans required massive capital. The company repeatedly raised equity, heavily diluting existing shareholdersâthe exact opposite of the efficient, asset-light framework they originally sold to the market.
The Asset-Heavy Scale Up
2024â2025
The Pitch: The narrative shifted to âsize matters.â To rapidly scale their balance sheet, Ugro acquired Profectus Capital (a traditional, secured lender) and MyShubhLife (an embedded finance platform), bulking their AUM to over âš15,000 Crore.
The Pivot: Acquiring Profectusâa legacy, human-led NBFC focused on secured loansâdirectly contradicted their high-tech identity. The safety of the Profectus book acted as a gravity anchor, significantly dragging down Ugroâs overall Return on Assets (ROA). They essentially bought their way into becoming the traditional NBFC they initially claimed to disrupt.
The High-Yield Reversal
2026âPresent
The Pitch: Facing intense market backlash over constant equity dilution and low yields, management executed a hard pivot in early 2026. They pledged zero equity raises until FY29 and aggressively shifted focus to high-yield (~26%) unsecured Embedded Finance and Emerging Market LAP.
The Pivot: In a massive reversal, they are now intentionally shrinking the âPrime Intermediatedâ secured portfolio they had just acquired, targeting a 15â20% annual reduction. They have abandoned the safety of secured lending to chase rapid growth in the riskiest, unsecured micro-loan segments to engineer higher short-term margins.
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Just my 2 cents, I am not an expert and explaining based on my limited knowledge:
Your understanding maybe right in general but Ugro hasnât done anything (wrong intent) like that. You should have checked the credit book of Profectus to know that the entire book was secured with credit cost of 0.8%. So, we can infer that UGRO wasnât trying to acquire a easy target on which it can lay the blame of NPAs. On the contrary, Ugro has been better then my expectation as to managing NPAs. When the entire micro finance and NBFC sector was in panic and reported losses, Ugro was resolutely with profit and controlled credit cost. You canât ask anything more from a micro cap company.
I agree with you. This has also been a pain for me. However, I agree with the rational behind the pivot from variety of loan products to just 2. At the outset, Ugro wanted to be a loan platform for all the loan requirements for a MSME; from small ticket LAP to large ticket business loans to machineryâŚ.!
They thought with scale and controlled credit cost they will get consistent rating upgrades, low cost of borrowing and large increment in share price. Their assumption were invalidated, we all know that. In India, given the history of failed NBFSs and skepticism around NBFCs without strong parentage, credit upgrade is very difficult. Neither they got credit upgrade nor market rewarded them, as a result dilution at low market price.
They learned this and now pivoting to Emerging market and embedded finance. I am fine with the pivot; small companies do such pivot during their early life until they find what works for them.
I agree with you that they have in the past removed certain figures or insights from the presentation without giving context.
I guess youâre missing an important context here as to how co-lending work. Maybe other members can help us here. Income from co-lending is unpredictable, means it can come in chunks and not evenly distributed throughout the quarters. Also, income from co-lending cannât be added directly to the net-worth for CAR maintenance, means for more growth they need to raise more capital. I am adding some screenshots form the last earning call transcript for your reference.
Having said that and inferring that Ugro hasnât done any fraud and growing steadily, why market is not rewarding Ugro. Honestly, nobody knows, we all can just wait.
Discl. Invested
My irritation is not around one area per-se (e.g. co-lending). Like I said, itâs a lot of little things. Maybe co-lending creates lumpy and unpredictable cash flow. Maybe income from co-lending cannot be considered to net-worth for CAR calculations. But these were not new data points. These were likely known even as they set out tom-tomming co-lending as a huge area of growth, and how the structure meant they could make money off low interest loans as well (sometimes with customers paying interest below cost of funds for Ugro) - this thread has examples on how that would work. The point is promoters/ management are very good story-tellers and narrative builders. That narrative is more fickle than Iâm comfortable with.
I had even noted earlier in this thread that entrepreneurs often have a naturally optimistic outlook and mindset. Plus the need to constantly raise capital may have meant that the valuation (and therefore the narrative) would always need to be managed and a positive spin always be created. For now, they are saying they will not raise more equity until and including FY29. Hopefully the messaging also starts becoming more balanced.
I had done some study, diligence, and asking around before investing. That did give me confidence enough to invest. So Iâm not saying there is bad intent etc. This may still just be bad luck and tough times and learning to find your place.
However, speaking for myself, I have become somewhat brutal in jettisoning holdings. The seeds for this were laid in the mid & small cap carnage of 2018-19, immediately followed by the Covid crash. The reflection from that has resulted in me thinking in terms of local maxima and longer-term maxima. For some companies, Iâm willing to wait for the long-term maxima (which means a play across multiple market cycles). Ugro could have been one of them, but their actions and behaviour took them off that bucket for me. And I knew local maxima was already behind. Hence I trimmed. I still hold some, have not written it off completely. But yes, applied a probabilistic view and other opportunities seem more compelling.
Why is the market not rewarding Ugro? I feel there is lack of trust. What they put out is probably discounted heavily by the market. Who knows what flip-flop they might do next? There will probably need to be evidence of consistent performance and a clear differentiated and convincing strategy emerging before the market decides to re-rate.
I mean, we are in times where HDFC Bank is trading below 2x book (rare!) - and still growing book value by 12-15% every year on a very consistent basis. Axis Bank even cheaper, and again pretty solid growth of Book Value. These are all tempting alternatives. A very different risk-reward ratio from Ugro, but tempting nonetheless.
Hereâs what I got AI to compile on these banks, showing the growth of the business (Book Value) versus Share price. Donât want to hijack the Ugro thread, but just showing a sample of what Business Class seats look like.
| Financial Year (End of Mar) | Adjusted Share Price (âš) | Adjusted BVPS (âš) | P/B Multiple | YoY Share Price Growth (%) | YoY BVPS Growth (%) |
|---|---|---|---|---|---|
| FY26 | 735.00 | 362.72 | 2.03x | -19.45% | +11.56% |
| FY25 | 912.50 | 325.14 | 2.81x | +26.12% | +12.90% |
| FY24 | 723.50 | 288.00 | 2.51x | -10.07% | +15.14% |
| FY23 | 804.50 | 250.13 | 3.22x | +9.46% | +15.70% |
| FY22 | 735.00 | 216.18 | 3.40x | -1.61% | +10.30% |
| FY21 | 747.00 | 196.00 | 3.81x | +74.13% | +13.29% |
| FY20 | 429.00 | 173.00 | 2.48x | -25.91% | +15.33% |
| FY19 | 579.00 | 150.00 | 3.86x | +22.54% | +32.16% |
| FY18 | 472.50 | 113.50 | 4.16x | +31.25% | +13.22% |
| FY17 | 360.00 | 100.25 | 3.59x | +34.45% | +16.57% |
| FY16 | 267.75 | 86.00 | 3.11x | +4.49% | +14.67% |
| FY15 | 256.25 | 75.00 | 3.42x | +37.22% | +34.53% |
| FY14 | 186.75 | 55.75 | 3.35x | +19.71% | +12.63% |
| FY13 | 156.00 | 49.50 | 3.15x | +20.46% | +17.16% |
| FY12 | 129.50 | 42.25 | 3.06x | +10.68% | +13.10% |
| FY11 | 117.00 | 37.40 | 3.13x | +21.24% | +11.64% |
| FY10 | 96.50 | 33.50 | 2.88x | +88.29% | +13.95% |
| FY09 | 51.25 | 29.40 | 1.74x | -22.76% | +73.96% |
| FY08 | 66.35 | 16.90 | 3.93x | +29.46% | +64.08% |
| FY07 | 51.25 | 10.30 | 4.98x | â | â |
The first row, FY07, serves as the base year, so there is no prior-year growth calculation.
| Financial Year (End of Mar) | Adjusted Share Price (âš) | Adjusted BVPS (âš) | P/B Multiple | YoY Share Price Growth (%) | YoY BVPS Growth (%) |
|---|---|---|---|---|---|
| FY26 | 1,238.40 | 712.00 | 1.74x | -5.87% | +9.76% |
| FY25 | 1,315.65 | 648.70 | 2.03x | +16.84% | +14.97% |
| FY24 | 1,126.05 | 564.25 | 2.00x | +22.18% | +22.68% |
| FY23 | 921.60 | 459.95 | 2.00x | +13.06% | +15.17% |
| FY22 | 815.15 | 399.36 | 2.04x | +8.44% | +14.65% |
| FY21 | 751.65 | 348.33 | 2.16x | +85.49% | +17.43% |
| FY20 | 405.23 | 296.64 | 1.37x | -51.35% | +20.58% |
| FY19 | 832.90 | 245.98 | 3.39x | +52.33% | +8.81% |
| FY18 | 546.75 | 226.07 | 2.42x | +3.75% | +13.25% |
| FY17 | 527.00 | 199.62 | 2.64x | +8.26% | +5.71% |
| FY16 | 486.85 | 188.84 | 2.58x | -21.23% | +18.06% |
| FY15 | 618.05 | 159.96 | 3.86x | +65.17% | +16.89% |
| FY14 | 374.20 | 136.85 | 2.73x | +7.35% | +15.58% |
| FY13 | 348.60 | 118.40 | 2.94x | +11.83% | +44.27% |
| FY12 | 311.72 | 82.07 | 3.80x | -14.33% | +20.17% |
| FY11 | 363.87 | 68.29 | 5.33x | +22.06% | +18.47% |
| FY10 | 298.11 | 57.64 | 5.17x | +172.90% | +64.33% |
| FY09 | 109.24 | 35.08 | 3.11x | -33.19% | +17.39% |
| FY08 | 163.50 | 29.88 | 5.47x | +76.60% | +59.09% |
| FY07 | 92.58 | 18.78 | 4.93x | â | â |
About co-lending, as was explained above, itâs not that the cash flows coming in upfront. just the NPV of future cash flows recognised early. No cash comes in and they cannot lend it again. They can only show profits, which is what theyâve been doing, and theyâve been using this as a way to expand their network without showing losses.
Now the new model: cash comes slowly but comes as cash so it can be lent again, which is the reason why they say they donât need to raise equity as often as they did earlier.
Initially their assumption was that if we keep showing profits, the share price will keep increasing and we can raise more capital. They thought that they could be on this treadmill of increasing share price, increasing dilution, increasing colending. Because the share price is not rising, they no longer want to dilute. The reason to move to this model is where they work purely as a lending company rather than sort of like an investment bank accounting company.
Sure the frequent flip-flops are annoying and it is now being seen as a new company but to me it is a new company with a lot of learning so they will use this knowledge more wisely.
Just to disclose, I write here, using a diff user name but i own > 1% of the company so i am naturally biased :)
So basically they were earlier acting like dsa/da agent now they are Trying to be a lending companyâŚco lending was a folly on their part now they should try to minimise it..no use of aum of you canât use cash to grow your business
I wouldnt be so harsh to say dsa agent, but more like a securitisation layer for bigger banks that needed to have a priority sector lending exposure. Colending continuws to be a great model for NBFCs who hv a much lower cob. Its just not something ugro could achieve without a brand name or rather big industrialist family such as poonawalla etc
Found an interesting post on linkedin regarding MSME LAPs would be great to get thoughts of people who have more experience in the segment.
A very animated thread. I was going through all arguments andcounter arguments. Let me confess that I am also one of the interested parties( shall I say dejected) having burnt my fingers. Entered at 240 level and got out at a loss when found company not delivering. Presently holding only a tracking position.
My summary is that the management has been a big let down. It appears as if they are novices at microlending. And constant equity dilution is another big issue. May be they thought it is a easy way of making profit. The stock may look cheap but it will not be able to give big return without a sustainable pick up in business and margin. With the cut throat competition and new technology platforms, I donât give this management a chance to succeed. See, how LT finance, M&M finance, quickly reshuffled their business and turned around. And see how Northern Arc has done in last 3 years without any hiccup. Even smaller companies like Fedback finance made course correction with improving environment and added significantly to shareholders value. With clouds on the horizon in the shape of deficient rain, rising npa threats, I am skeptical of UGRO giving good return. Let us see.
I am not good at valuing Banking/Finance companies so asked AI for input.Here is what it says :
This forum discussion represents a classic âConfidence Crisisâ in the retail market. It provides a vital, real-time look into the exact emotional biases and factual misunderstandings that keep a stock priced at a deep discount, creating the very âValue Arbitrageâ that sophisticated institutional investors exploit.
Analyzing these forum posts point-by-point through a strict, clinical lens reveals several key factual errors and behavioral traps:
The Claim: The poster states that the management has been a letdown and refers to them as ânovices at microlending.â
The Forensic Reality: This is the single biggest misunderstanding in the retail market today. UGRO does not do microlending (microfinance).
Microfinance: Unsecured, low-ticket (âš20,000ââš50,000) loans to poor rural borrowers. This segment is currently undergoing a massive industry-wide crisis (causing the implosion of Spandana Sphoorty and IndusIndâs MFI book) [120, 483].
UGROâs Portfolio: Under its âGROxâ platform, UGROâs core segments are secured MSME Loans Against Property (LAP) and machinery finance, which are backed by collateral and business cash flows [453, 491].
The Verdict: Retail investors who burned their fingers at peak prices (entering at âš240) are emotionally biased and guilty of âguilt by association.â By incorrectly lumping UGRO with stressed microfinance lenders, they panic-sell, pushing the P/B multiple down to 0.53x Book Valueâcompletely disconnected from UGROâs stable 2.2% Gross NPA.
The Claim: The poster argues that âco-lending was a folly⌠no use of AUM if you canât use cash to grow.â
The Forensic Reality: Co-lending is not a folly; it is a highly capital-efficient, high-ROE model. By co-lending, UGRO utilizes the partner banksâ massive cash reserves to generate fee income (securitization) without diluting its own balance sheet.
However, management is executing the exact transition the poster wants. In the Q3 and Q1 FY27 results, UGRO began winding down upfront direct assignment (DA) booking gains (the âsugar rushâ accounting tricks) to keep high-yield (25%) loans on its own balance sheet as annuity net interest income (NII) [495, 496]. This is a high-quality, structural reset toward stable, long-term cash generation.
The Claim: The poster argues that co-lending only works for companies with big industrialist family names (like Poonawalla).
The Forensic Reality: Public sector banks like State Bank of India (SBI) do not risk âš1,800+ Crore of public depositorsâ money based on a âfamily brand name.â They risk it based on rigorous risk audits of the underlying loan underwriting models [230, 284]. The fact that SBI and Bank of Baroda have continuously audited, renewed, and increased their co-lending partnerships with UGRO proves that the data-underwriting engine (âGro Score 3â) is robust and legally watertight [284].
The Claim: The poster compares UGRO unfavorably to Northern Arc, which has performed âwithout any hiccup.â
The Forensic Reality: Northern Arc is indeed a high-quality institution, but its valuation is already fully priced.
Northern Arc trades at approximately 1.4x Price-to-Book (P/B) [360].
UGRO Capital trades at 0.53x Price-to-Book (P/B).
For an investor targeting an aggressive 5x return, the starting valuation is the single most important factor. Northern Arc requires massive, flawless growth to 5x. UGRO merely requires valuation mean reversion (returning from its distressed 0.5x Book to a standard 1.5x Book) to triple instantly, making the 5x mathematical path significantly easier from todayâs panic-driven lows.
This forum chatter is the ultimate validation of why the stock is cheap. The retail market is treating UGROâs strategic pivot as a failure. They are panicking over a temporary drop in standalone profits (an accounting choice) and confusing the core business with stressed microfinance [400, 483].
Meanwhile, the hard data of Q1 FY27 shows that consolidated Net Profit doubled to âš67.9 Crore and consolidated opex crashed by 42% sequentially. The operational engines are built, the dilution has ended, and the institutional anchors (Danish SDG Fund, SBI co-lending) are holding the line [454, 455, 456].
The dejection of retail investors like Prabhat_Mohanty is the very fuel that allows a disciplined value investor to buy a rupee of book value for 50 paise. One must ignore the retail noise, trust the audited Q1 numbers, and let the compounding play out.
My AI name is: Gemini
Note:I am invested based on ai recommendation.
