Ugro Capital Ltd (BOM:511742) Q2 2025 Earnings Call Highlights: Record Loan Origination and ...

• Loan Origination: INR1,917 crores, lifetime highest for the quarter.

• Micro Enterprise Channel Disbursement: INR456 crores, more than double from the previous quarter.

• Co-lending Volume: INR650 crores, highest ever for the quarter.

• Total Income: INR342 crores, up from INR301 crores in the previous quarter.

• Net Total Income: INR200 crores, compared to INR165 crores in the previous quarter.

• Profit After Tax (PAT): INR35 crores, a 17% increase quarter-over-quarter.

• Gross NPA: 2.1% at the end of the quarter.

• Net NPA: 1.4% at the end of the quarter.

• Collection Efficiency: Stable at around 96%.

• Branch Expansion Target: 250 locations by end of the year, 400 by next year.

• Warning! GuruFocus has detected 7 Warning Signs with BOM:511742.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

• Ugro Capital Ltd (BOM:511742) achieved a significant milestone by reaching an AUM of INR10,000 crores, reflecting strong growth for a relatively young company.

• The company reported its highest-ever loan origination of INR1,917 crores in the last quarter, indicating robust business momentum.

• Ugro Capital Ltd has been recognized as India's best fintech lender of the year, highlighting its innovative use of data and technology in MSME financing.

• The company has successfully expanded its branch network, with plans to reach 250 locations by the end of the year and 400 by the next year, supporting its growth strategy.

• Ugro Capital Ltd has established strong partnerships with over 60 lenders, including domestic banks and global financial institutions, enhancing its co-lending capabilities.

• The company's gross NPA stood at 2.1%, with a slight uptick in unsecured loans and micro enterprises, indicating some asset quality challenges.

• Ugro Capital Ltd's interest income faced compression due to regulatory changes affecting the timing of interest charges.

• The supply chain finance segment has been winding down due to unprofitable yields, with a peak NPA of INR52 crores, impacting overall credit costs.

• Despite achieving a rating upgrade, the company has not yet realized significant benefits in terms of reduced borrowing costs.

• The company's ROA target of 4% by FY26 is ambitious, requiring significant improvements in yield, cost of borrowing, and operating leverage.

Q: Can you provide some color on the GNPA for both on-book and off-book assets, and how do you see the trajectory of GNPA and credit costs going forward? A: The overall GNPA at the AUM level is 2.1%, with the off-book portion at around 1%. The on-book GNPA appears higher due to co-origination, where bad loans return to our books. We expect the GNPA and credit costs to stabilize, with unsecured business loans peaking at around 4.5% GNPA and micro business loans at about 1% GNPA.