ValuePickr Forum

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

I still had a slight inkling of doubt about the offices and after doing some digging I’ve found the missing offices. So ugro has 9 main offices… The main one is in Mumbai and the others are in Bangalore, Delhi, Ahmedabad, Chennai, Hyderabad, Jaipur, Kolkata and pune. Now almost all of the offices can be found on Google maps on their website here: Contact Us | U GRO Capital – Sector specific loans to power India’s SME growth or on Google maps in general by typing directly… . Except for Delhi, Hyderabad and Kolkata.
After a lot of digging I found images of the offices in

And hyderabad:

I haven’t found Kolkata but I found the building and the likes of HSBC Bank and TCS occupy offices there too and considering all the others do exist I’ve no reason to doubt. Found some staff from that office online too so I don’t doubt it’s real : and
Expect the remaining 25 offices on Google soon as per the CS. I’ve personally opened an office recently and Google took 2 months to send me my Google business code to my doorstep so the fact the new ones aren’t visible should not be an issue since they were only recently opened and I’ve seen instances of even more delays due to the pandemic. That being said why the older offices like Kolkata are not up I really don’t know. At least I’m satisfied their assets are real now and can put this to bed. Actually seeing their logos on buildings has made this very tangible now and was worth the search(they’ve taken up offices in buildings with other banks too which is nice to see) :slight_smile:

Also, After the news of credit rating and fund raising was digested the volume has finally settled back down again with selling pressure only at higher levels and the rise today along with highs was actually meaningful with a good number of shares being traded near 110 and above with good demand and not a few errant ones due to lack of limits being applied.

Disc: Invested. Not a sebi advisor


Need to immensely thank you for continuously sharing the information. I would not be too excited or disheartened about fluctuations in stock price, would be more excited to see growth in financials.
IMHO, this company would prove or disprove lending using technology and loans can be sanctioned in an hours time. Since I am invested in this company, am an indirect actor for this change that could transform the industry.
Disc: Invested 6%, my views are biased

I’m not bothered about the stock price usually. In this case I was immensely worried worried that there was something we were missing due to the lack of visible addresses, the low liquidity which suddenly increased in volume along with the huge influx of sellers, the ponzi scheme review on glassdoor, the religare history etc. One can never be too careful with a microcap especially when it’s the most riskiest sectors known ie nbfcs. After understanding the history of the listing properly(there are still some chokhani securities sellers/DIIs aren’t selling in bulk), understanding naths role at religare and the current corporate governance structure to prevent a recurrence thanks to the posters here, understanding why the volumes increased(credit rating/raising funds), the reply of the CS/finding the Branches and finally seeing the volumes come down and the sellers becoming sparse at lower levels and buyers increasing at higher levels I’m now finally happy and hence why the stock price mattered uptil now but you are right in saying only a healthy growth in financial matters from now on since there doesn’t seem to be any skeletons in the closet here. I’m assuming those of us buying now are holding for a few years to see the story play out so the stock price increase by a few percent isn’t relevant. However, Its how it did it that matters. I had missed the religare flag above and posted on here before finding it and felt it my duty to check every red flag possible to make up for that error and I finally feel satisfied.
Also, while I too am excited about the role tech will play here I wouldn’t keep too high expectations(it’s only an inprincipal approval in 1 hour so we need to trust the human eye too in the balance 23 to 47 hours before the loan is finally approved).
However, as admantium mentioned so beautifully above we are getting tech + team + aum + 339 crores cash + branches for 700 to 750 crore with under 1 times leverage which is the closest to starting an nbfc on our own that we could possibly get and that’s the main draw here. I hope their tech changes the industry but il settle for it helping keeping gnpas under 3 to 4 percent as they scale while improving NIMs :slight_smile: .
Anyway, I’m done studying and posting about the company it is today and was yesterday and Will only be tracking it once every quarter from now on so we can build a good picture of it moving forward and what it will be in the future. Cheers

Disc: Invested. Not a sebi advisor.


I wanted to gauge the competitive landscape in MSME lending space, can someone spell out list of MSME focused NBFC’s for peer comparison?
One company which comes to my mind is Capri Global.

Zerodha-backed alternate debt asset platform Wint Wealth on Monday (May 31, 2021) launched Wint Bricks through which business loans backed by property will be made available for investment to retail investors. For this, Wint Wealth has tied up with UGRO Capital, an NBFC with a credit rating of A, which focuses on addressing the capital needs of small businesses.


The cost of funds for ugro capital itself is 10%.
How can they lend for 9.5%?

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I think Ugro is borrowing on the platform from retail HNI investors.

This is want I understood from the other source.

Could be wrong. Awaiting more info.


This article Zerodha-backed Wint Wealth launches new debt investment product to offer 9.5% pre-tax XIRR in 18 months - The Financial Express talks about financing retail investors against mortgaging homes. How will this help Ugro? Most likely, customers are from zerodha itself having entire KYC, 6 months bank transactions and stocks trade transaction. My guess is, Wint Wealth will use Ugro platform to analyze customers for which Ugro might get service charges. All this is my guess, else, why should Wint wealth go Ugro?
Disc: invested 6% (very risky investment), my opinion is very biased

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I fail to understand how this ‘collateral’ they are pledging works. Lets unpack, when Ugro Capital gives out business loans they demand property as collateral, how can they use this collateral to raise additional funds ? What happens if the business loans go sour since they can’t recoup by liquidating the collateral as they have pledged this to obtain additional loans, initially I thought this should not be allowed but I see that this MLD is SEBI approved. Pardon my ignorance in understanding this debt merry-go-around !


Great discussion here. Although discussions above have assumed incorrectly that:

  1. ICICI, CUB, DCB have mastered SME lending: this is incorrect and is reflected by quite high NPA rates in their SME portfolios. The credit models of incumbents are not really sector specific. I personally know a few vended models that are used by these banks because they are somewhat better than indigeneously developed
  2. Reach: Higher NPAs have meant that incumbents have stayed away from being aggressive in even safe sectors. Credit risk appetite is cascaded by portfolios in all these banks. So even if an upcycle may be in sight, incumbents will not go after profitable SME sub-sectors. (e.g. chemical SMEs, auto-ancs)
  3. Co-lending: RBI wrote a brilliant paper on how NBFCs will play a critical role, but would need to developed tech platforms to enable sharing borrower info, limit calcs etc with large banks…Ugro has taken the lead here (Ugro has also garnered awards for this)
  4. Not all NBFCs near book-value are same - This NBFC is massively de-leveraged. As leverage increases (400-600 crore per quarter) and if NIMS stay stable at 4.5-5% and assuming superior credit risk management (1-2% NPAs) this stock will come out as grossly undervalued.

Disc: invested since Jan-Feb 2020. 5% of my portfolio. Views are biased but have been confirmed with SME experts (ex-heads of above incumbents’ SME divisions)


Where would these Rs 400 - 600 crore come from, bonds or banks? With a rating of A wouldn’t cost of funds be higher reducing the margin unless Ugro wants to charge their customers absorbent interests which would reduce the capability of repayment and lead to higher NPAs.
IMHO, Ugro should be compared with micro finance companies, not ICICI,CUB,DCB which have big retail deposits with interests between 3 to 5.5 percent, they can afford NPA from MSME sector. The most recent bond that Ugro sold was at 10+ percent
Disc: invested 6 percent, biased opinion


They are not lending, they will borrow by issuing debentures at 9.5% Plus 2% to be given to wint as fees so its 11.5% p.a borrowing for 1.5 year period. You can say Ugro will re-mortgaging the properties of its own clients to get short term loan on them, they will create a pool of such kind.

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I am not sure if i am getting it right…

so Person (A) mortgages his asset to Ugro (B) and gets a borrowing to funs his buisness…
Now B goes to public © and says, Hey i have this underlying asset, could you lend me money ?
I will issue you debentures for it
***what is Ugro going to do with this money ?

what happens if Borrower A defaults ?
Will Ugro liquidate the asset and return the money to C ? As a shareholder of Ugro, where is my interest bieng protected here ?

Is this some really innovative way of raising money through assets that are pledged to you ?
why did nobody else in finance world do it ? and if they did, i would be eager to know of consequences if ever things went bad.

the size of issue is quite small, about 20cr only and is supposed to be covered by a collateral pool of 1.25x or 25cr, but i am still unable to make sense of such a arrangement…

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This will give you some idea

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Chk this link

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Thanks for providing the links, this is the missing piece of the puzzle from the credit ratings report on May 21st, and the default clauses are known for each debenture. Edit: I linked the wrong post.

  • Failure of the company to make payment as per Original Repayment Schedule
  • Failure of the Issuer to exercise or honour the call option on the Call Option Date
  • Rating downgrade of the Issuer below A-
  • Rating downgrade of the debentures below AA (CE)
  • PAR > 60 in the loans constituting the Asset is greater than 5% of the aggregate outstanding principal amounts of the loans constituting the Asset
  • Failure to maintain minimum security cover
  • Any change in regulation/guidelines
  • Failure to certify/confirm the non-occurrence of any Credit Events in the manner prescribed in the Transaction Documents
  • Issuer has defaulted in making any payments due on its financial indebtedness

Edit 2: There’s a long memorandum attached as a part of this, which may contain more details. File is too large to attach.

This may be painfully obvious, but worth underlining that the debentures have a clause which prevent Ugro financing dividends through debt:

Negative Covenants: […][Ugro agrees not to] declare or pay any dividend or make any distributions on its equity or preference shares or other shares compulsorily convertible into equity shares, unless the proposed payment or distribution
is out of the net income of the current Financial Year (excluding any amount resulting from the revaluation of any of the Issuer’s assets).


This explains how covered bonds work and risk of WintWealth is minimised through SPV.

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Wanted to add my thoughts on this share, Thanks to the people for bringing this company to the foray.
But just remember before investing into this company that SME financing is one of the most riskiest form of lending even when it is backed by securities. The due diligence that has to be done is just mind boggling. I deal with SME financing in my day to day life and as the times proceed people do a lot of work into knowing the loopholes in the acts primarily the SARFAESI act from measly inflating the security values to fake receipts and giving lands that cannot be taken possession in case of turning into NPA the list goes on. Now there are even cases of them acting in concert to turn their accounts into NPA if someone from their group is not granted an enhancement or any other facility as per their respect. Even when we proceed legally the stock is usually gone, The machineries either sold or rendered unusable. If we think that the lands that are mortgaged might be of use only then will we able to get into the issues of excess valuation, Land locked property or certain govt projects causing reduction in value. The point i want everyone to note is that SME financing is more or less like a gamble and all the botch ups are making it more dangerous… There is no method of underwriting that can make this safer. Making unbiased decisions, providing for and writing off bad debts as it goes is the only way to keep a higher rate of growth and also NPAs under check. Because even after all this, pure play SME lending has one of the highest return ratios in form of interests and commission and hence if done right better returns.

Wanted to share this, Kindly delete if this provides no useful info
Invested holding a tracking position, Waiting for more data on the recent rbi restructuring package before buying more


Given the risk, 8% NIM would really look low. IDFC FIRST bank also would have ~5% NIM (despite being bank). I know we can not compare it to bank, but I am not sure if NIM of 8% is adequate. I mean when you expect AUM to accelerate at such a high rate, you will attract the high risk. It would have been really a great deal if NIM would have been high, is what I think and I might be wrong.