Any current/future new fundraising through debt or equity?

U GRO Capital is currently very well capitalized with a capital adequacy of 25%. The company has multiple tools in place to cover their portfolio under credit guarantee schemes. There is no immediate plan or hurry for new fundraising. The management aims to make U GRO a well-diversified, well-listed public company. They plan to tap the public market for the next round of capital but will do so only when existing shareholders and the Board are comfortable with the price and size, and when the market conditions are favorable. Efforts to explain the broader company story to public market investor

Any current/future capex/capital investment/strategic investment?

U GRO Capital is expanding its branch network, targeting activation of an additional 75 branches by the end of the current financial year (FY24), primarily micro branches which are high yield and good quality portfolio creators. The new micro branches take 12 to 16 months to breakeven, with relatively low cost. Capital allocation is being done gradually to balance current profitability and future growth, considering FY25-FY27 horizons. The company is well capitalized with a 25% capital adequacy ratio and is not in a hurry to raise capital but plans to tap public markets for future funding when

Future growth expectations in sales/revenue/volumes?

U GRO Capital targets a 30%+ CAGR in AUM growth over the next several years. They aspire to reach an AUM close to INR 10,000 crores by year-end, with a possible slight shortfall of INR 300-500 crores acceptable to maintain profitability. Net loan originations have grown steadily from INR 642 crores in Q2 FY22 to around INR 1,476 crores recently, with plans to increase this further. The company plans to expand its branch network significantly, adding 75 new micro branches by the end of the financial year to tap into high-yielding, quality micro enterprise segments. They aim to maintain a cost-t

Future growth expectations in earnings/operating earnings/profits/EPS?

U GRO Capital aims for AUM growth of around 30% CAGR over the next few years. Target cost-to-income ratio is below 45%. Credit costs expected to stay under 2%. The company targets a steady-state ROA of 4% and ROE around 17-18%. For H1 FY24, net realized blended yield was about 16.2%, with gross yield closer to 17.3%. PAT guidance: Expect at least 20% growth in profitability in the next half compared to H1 FY24. The company is focused on maintaining or improving PAT even if it sacrifices some AUM growth (willing to give up INR 400-500 crores in AUM to protect profitability). Branch expansion (a

Ugro CapitalQ2 FY24Finance

Ugro Capital Q2 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹82.4P/E: 9.1Market Cap: ₹1.3K CrSector: Finance

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 2

U GRO Capital targets a 30%+ CAGR in AUM growth over the next several years.
They aspire to reach an AUM close to INR 10,000 crores by year-end, with a possible slight shortfall of INR 300-500 crores acceptable to maintain profitability.
Net loan originations have grown steadily from INR 642 crores in Q2 FY22 to around INR 1,476 crores recently, with plans to increase this further.
The company plans to expand its branch network significantly, adding 75 new micro branches by the end of the financial year to tap into high-yielding, quality micro enterprise segments.
They aim to maintain a cost-to-income ratio below 45%, a credit cost below 2%, targeted ROA of 4%, and ROE around 17-18% over the next 2-3 years.
The focus remains on building a long-term sustainable portfolio with balanced secured and unsecured loans, targeting underserved MSMEs.

Margin guidance

Category 3

U GRO Capital aims for AUM growth of around 30% CAGR over the next few years.
Target cost-to-income ratio is below 45%.
Credit costs expected to stay under 2%.
The company targets a steady-state ROA of 4% and ROE around 17-18%.
For H1 FY24, net realized blended yield was about 16.2%, with gross yield closer to 17.3%.
PAT guidance: Expect at least 20% growth in profitability in the next half compared to H1 FY24.
The company is focused on maintaining or improving PAT even if it sacrifices some AUM growth (willing to give up INR 400-500 crores in AUM to protect profitability).
Branch expansion (adding 75 new branches) is aimed at supporting growth without sacrificing bottom line.
ESOP cost for H1 FY24 around INR 2.5 crores factored into P&L.
Overall, U GRO is cautious but motivated by large growth opportunity, balancing scale and profitability.

See what Ugro Capital management said on margin guidance — free account, 30 seconds.

Fundraise plans

Yes

U GRO Capital is currently very well capitalized with a capital adequacy of 25%.
The company has multiple tools in place to cover their portfolio under credit guarantee schemes.
There is no immediate plan or hurry for new fundraising.
The management aims to make U GRO a well-diversified, well-listed public company.
They plan to tap the public market for the next round of capital but will do so only when existing shareholders and the Board are comfortable with the price and size, and when the market conditions are favorable.
Efforts to explain the broader company story to public market investors have started about two months ago and will continue for the next two quarters.

Order book

- The transcript does not explicitly mention the current or expected order book or pending orders in specific terms. - The focus is mainly on the Assets Under Management (AUM), targeting INR 9,000 to INR 10,000 crores by year-end. - Management is prioritizing profitable growth over sheer volume, willing to sacrifice INR 500-600 crores in AUM to improve PAT and yield. - The company is actively expanding its branch network from 75 to 150 branches by the end of the financial year to drive growth. - There is a robust pipeline and demand in their lending products, with more demand than supply, especially in co-lending. - The management expects to sustain a CAGR growth rate of around 30% with improved portfolio quality and yield. No direct mention or quantification of orderbook/pending orders was provided in the transcript.

See what Ugro Capital management said on order book — free account, 30 seconds.

Capex plans

Yes

U GRO Capital is expanding its branch network, targeting activation of an additional 75 branches by the end of the current financial year (FY24), primarily micro branches which are high yield and good quality portfolio creators.
The new micro branches take 12 to 16 months to breakeven, with relatively low cost.
Capital allocation is being done gradually to balance current profitability and future growth, considering FY25-FY27 horizons.
The company is well capitalized with a 25% capital adequacy ratio and is not in a hurry to raise capital but plans to tap public markets for future funding when market conditions are favorable.
Investments in technology and data analytics (team of 275 people) continue, supporting underwriting, distribution, and growth.
No immediate large-scale capex beyond branch expansion and digital platform enhancements disclosed.

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