Q1 2027 Ugro Capital Ltd Earnings Call Transcript
Key Points
- Ugro Capital Ltd (BOM:511742) achieved a significant milestone by crossing INR 1,000 crore of monthly disbursements in July 2026, driven by its emerging market branch network and GrowX platform.
- The company's strategic realignment is progressing well, with the combined contribution of emerging market and embedded merchant finance increasing to 46% of total AUM in June 2026, up from 32% in December 2025.
- Operating cost reset is substantially complete, with quarterly operating expenses reduced to approximately INR 119 crore from INR 217 crore in Q4 FY26, aligning with the FY27 guidance.
- Portfolio yield improved to 18.1%, up 63 basis points quarter-over-quarter, as the mix shifted towards higher-yield emerging markets and GrowX segments.
- The company's cost of borrowing declined for the seventh consecutive quarter to 10.14%, with 66% of borrowings now having a tenure beyond three years, improving the liability profile.
- GrowX, the embedded merchant finance platform, demonstrated strong growth with AUM increasing by 32% quarter-on-quarter to INR 3,003 crore, disbursing over 60,000 loans monthly.
- Emerging market branch productivity is improving, with mature branches (older than 12 months) producing approximately INR 81 lakh per month, within the target range of INR 80-85 lakh.
- The company maintains a comfortable capital adequacy ratio of 21% on a standalone basis and a strong liquidity position of INR 1,864 crore.
- Management is confident of achieving planned growth without incremental equity through FY29, supported by internal capital accretion and co-lending partnerships.
- The merger of Profectus Capital into Ugro Capital Ltd (BOM:511742) has been filed with NCLT, which is expected to simplify the corporate structure and improve earning predictability.
- Total AUM remained flat or declined sequentially due to the faster-than-expected rundown of the prime intermediated portfolio, moderating the reported AUM trajectory in the near term.
- Income from co-lending and direct assignment declined significantly to INR 75 crore in Q1 FY27 from INR 155 crore in Q4 FY26, reflecting the strategic shift away from this model.
- Interest income declined 13% quarter-over-quarter due to foreclosures in the prime intermediated portfolio, leading to upfront recognition of costs previously amortized over the loan tenor.
- The company's share price has not reflected the underlying business progress, trading at a significant discount to its net worth, which management attributes to a shareholder register dominated by long-term investors nearing fund life exits.
- GNPA on AUM increased slightly to 2.6% from 2.5% at March 26, partly due to a denominator effect as the defocused prime book runs down.
- The company faces execution risks related to scaling the emerging market branch network to target productivity levels and managing credit risk as it expands into longer-tenure embedded finance products.
- A faster-than-expected runoff of the prime portfolio could lead to higher income reversals, putting pressure on the total P&L and requiring accelerated disbursements from focus segments to offset.
- The one-time deferred tax adjustment due to migration to the new tax regime makes reported PAT-based ROA of 2.8% not directly comparable, with pre-tax ROA at 2.6%.
- The merger with Profectus Capital will result in a non-cash accounting adjustment that may reduce reported net worth, although it will not impact regulatory capital adequacy.
- Management acknowledged that a couple of recent shareholder resolutions were not approved or were close to not being approved, partly due to proxy advisory firms' recommendations, indicating governance-related friction.
Ladies and gentlemen, good day and welcome to the Q1 FY27 earnings conference call of Urvo Capital Limited. As a reminder, all participant lines will be in the lesson only mode and there will be an opportunity for you to ask questions after presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Juhi Manwani from Arihant Capital Markets Limited.
Thank you and over to you.
Hello and good afternoon to everyone. On behalf of Arihant Capital Markets, I thank you all for joining into the Q1 FY27 earnings conference call of Ugro Capital Limited. Today, from the management, we have Mr. Satyendra Nath, the founder and managing director, Mr. Anuj Pandey, the Chief Executive Officer, Ms. Shilpa Bhattar, Chief Financial Officer, Mr. Siddharth Rajan.
Head of Strategy and Investor Relations. So without any further delay, I will hand over the call to Mr. Sachendranath for his opening remarks. Over to
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