U GRO Capital NCD IPO –
Should You Invest?
Introduction
•U
GRO
Capital
is
issuing
Non-Convertible
Debentures (NCDs), rated IND A+/Stable, offering
high-yield opportunities with coupon rates ranging
from 10.15% to 10.40% across three tenures: 18, 24, and
30 months. Secured and redeemable, these NCDs
aim to attract investors seeking stable returns higher
than traditional FDs.
U GRO Capital NCD
Series Details
• Coupon Rates and Effective Yields
Investors can choose between different series with
coupon rates of up to 10.4%. Each series provides an
effective yield based on tenure, creating options for
investors based on their preferred time horizon.
Allocation Ratio
• Category-Wise Allocation
• The allocation ratio is pre-determined according
to SEBI guidelines and helps ensure balanced
distribution across investor categories. Once the
IPO subscription closes, applications are sorted
into
categories,
accordingly.
and
allocations
are
made
Investment Process
• Simple Online Investment
⚬ Investing in U GRO Capital’s NCD IPO via platforms like
GoldenPi involves a quick, three-step online process for
amounts up to ₹10 lakhs. Higher investments may require
additional steps, streamlining accessibility for retail
investors.
Financial Overview
• Key Financials: Revenue, Expenses, EBIT, Net
Worth, and PAT
⚬U GRO’s recent financials include robust revenue
growth, stable EBIT, and an expanding net worth,
demonstrating financial strength to support its
growth strategy.
Cash Flow Analysis
• Cash Flow Movement Over Five Years
⚬Operating cash flow reflects income from core
lending activities, while investing cash flow shows
capital use for asset purchases and security sales.
Financing cash flow highlights the company's debt
management strategies.
Issue Analysis
• Pros
⚬IND A+ rating provides credibility and a stable
outlook.
⚬High coupon rate of up to 10.4%, offering better
returns than traditional bank deposits.
• Cons
⚬Decreasing Interest Coverage Ratio signals potential
challenges in meeting debt obligations.
Company
Overview
• About U GRO Capital
⚬U GRO Capital, formerly Chokhani Securities, was
acquired in 2018 and refocused on MSME lending
under leadership by Shachindra Nath. With an
expansive branch network and a publicly traded
status, U GRO is a prominent player in MSME
financing.
Strengths
• Key Strengths of U GRO Capital
⚬Rapid AUM Growth: Multi-fold AUM growth to INR 92.2
billion by 1QFY25.
⚬Diversified Portfolio: Balanced regional and sectoral
distribution.
⚬Strong Capital Buffers: Maintains a CAR of 20.75%,
enabling future growth.
⚬Strategic Co-Lending Partnerships: Collaborates with
public sector banks.
⚬Technology Integration: Uses data-driven processes
for loan monitoring.
Weaknesses
• Challenges Facing U GRO Capital
• Limited Operational History: Relatively new, with
most AUM generated in the last year.
• Elevated Credit Costs: High gross NPA rate and
cost-to-income ratio.
• Operational
Expansion
Costs:
Large
branch
expansion plan impacts operational costs.
• Leverage Risks: Target leverage ratio of 4.0x could
stress finances if asset quality weakens.
Conclusion
• Summary
⚬U
GRO
Capital’s
NCD
IPO
offers
a
high-yield
investment option for those looking to surpass bank
FD returns. With a solid financial structure and stable
rating, it presents opportunities alongside some risk
factors, making it ideal for those with moderate risk
tolerance seeking diversified income sources.
Thank you!
To know more, visit:
https://goldenpi.com/blog/investment-guide/ncd-ipo/u-gro-capital-ncd-ipo-october-2024-should-you-in
vest/