U GRO Capital, a prominent DataTech NBFC specializing in MSME lending, achieves a significant milestone with CRISIL Ratings upgrading its long-term rating on bank loans and non-convertible debentures to ‘CRISIL A/Stable’ from ‘CRISIL A-/Positive’, while reaffirming the short-term rating at ‘CRISIL A1’.
This upgrade highlights U GRO’s capability to strengthen its franchise business, propelled by robust business prospects and an extensive operating network. The achievement is further accentuated by U GRO’s favorable capitalization levels and enhanced diversity in its resource profile. Notably, U GRO has raised substantial equity capital of approximately Rs 1,240 crore since its inception, with a recent infusion of Rs 340 crore in fiscal 2024 from Danish Sustainable Development Goals Investment Fund and other prominent institutions. This capital injection, coupled with a reported net worth of Rs 1,405 crore as of December 31, 2023, bolsters the company’s growth aspirations.
U GRO Capital’s assets under management (AUM) have surged to Rs 8,364 crore as of December 31, 2023, underscoring its prowess in serving the MSME financing segment. The company’s off-book portfolio, accounting for 45% of AUM, reflects strategic co-lending arrangements and partnerships. Leveraging collaborations with over 10 co-lending partners, 55 lenders, 40 fintechs, and 500 GRO partners, U GRO Capital delivers tailored financial solutions to over 67,000 MSMEs across India. At the heart of this success lies the proprietary underwriting model, GRO Score 3.0, a pioneering platform enabling data-driven credit access for small businesses nationwide. This expansion has been fueled by its extensive operating network, comprising 104 branches, along with strategic partnerships with over 70 anchors and 50 OEMs. The company’s diversified product offerings, including secured loans against property, business loans, supply chain financing, and machinery loans, comprehensively cater to the MSME segment.
The pre-provisioning operating profit increased to an average of 2.7% on managed assets in the first nine months of fiscal 2023, up from 2.0% and 2.1% in fiscal years 2022 and 2021, respectively. This improvement was supported by a strong net interest margin and AUM growth. ROMA rose to 0.8% in fiscal 2023 from 0.6% in fiscal 2022.
The operating cost to average managed assets ratio improved from 5% for fiscal 2023 and fiscal 2022 to 3.9% for the first nine months of fiscal 2024, indicating a positive trend. U GRO’s significant investments in systems, processes for underwriting, proactive risk management practices, and diversified portfolio serve as pillars of strength, effectively mitigating potential risks associated with its asset quality. The company’s liquidity position remains adequate, with positive cumulative mismatches in all maturity buckets up to one year, providing resilience against short-term obligations.
U GRO Capital already holds a long-term rating of “IND A/Stable” from India Ratings and Research Private Limited since February 2023. This upgrade underscores the establishment of underlying operating leverage and U GRO’s evolution into a scaled dedicated player for MSME Financing in India.
U GRO Capital’s journey epitomizes innovation and strategic foresight in the realm of MSME financing. Conceived as India’s foremost small business financing platform, U GRO Capital seamlessly integrates the power of Data & Tech, distinguishing itself as India’s first listed startup in the domain. The foundation laid by Mr. Shachindra Nath in 2018 marked a pivotal moment, with the acquisition of ‘Chokhani Securities Limited’ and a landmark capital infusion from prominent investors including TPG – NewQuest, PAG, ADV Capital, and Sameena Capital, among others.
Despite facing sectoral challenges, U GRO Capital remained committed to investing in its operating infrastructure during the Covid period. The company’s workforce grew significantly from a total of 165 people and 9 branches at the end of 2020 to 1560 people and 104 branches in 2023. This expansion has led to substantial growth in Assets Under Management (AUM), rising from INR 861 Crores at the end of 2020 to INR 8,364 Crores at the end of Q3 FY24.
Mr. Shachindra Nath, Founder and Managing Director of U GRO Capital, expressed his enthusiasm about the rating upgrade, stating, “We are delighted with the rating upgrade from CRISIL Ratings. It underscores our relentless dedication to supporting the growth aspirations of MSMEs and reflects the strength of our business fundamentals. This upgrade not only bolsters our liability franchise but also enables us to optimize borrowing costs and propels our growth journey. We remain committed to delivering value to our stakeholders while maintaining the highest standards of corporate governance.”