Ugro Capital Limited · NSE:UGROCAP
Ugro Capital — Q1 FY2025 Earnings Presentation
33 slides from Ugro Capital's earnings presentation, Jul 31, 2024
Slide 1: Exchange filing cover letter
31st July 2024 To BSE Limited National Stock Exchange of India Limited Phiroze Jeejeebhoy Towers Exchange Plaza, 5th Floor, Plot No. C/1, G Dalal Street Block Bandra, Kurla Complex, Bandra Mumbai 400001 (East) Mumbai 400051 Scrip Code – 511742 Symbol – UGROCAP Subject: Investor Presentation for the
Slide 2: UGRO Capital Limited Q1'FY25
UGRO Capital Limited Q1’FY25 DataTech Empowering Small Businesses (MSME) Lending NSE: UGROCAP | BSE: 511742 Slide 1
Slide 3: Safe Harbor
Safe Harbor This presentation has been prepared by UGRO Capital Limited (the “Company”) solely for your information. By accessing this presentation, you are agreeing to be bound by the trailing restrictions. This presentation is for information purposes only and should not be deemed to constitute or
Slide 4: Executive summary: Q1FY25 performance
Executive summary: Q1FY25 performance Executive Summary of the Quarter Successful Equity Fund Raise in line with business plan: ~INR 510 Cr infused; Balance ~INR 755 Cr expected over next 18 months Equity raised of INR 1,265 Cr (INR 258 Cr through CCDs and INR 1,007 Cr through warrants); of whic
Slide 5: Performance Highlights for Q1'FY25
Performance Highlights for Q1’FY25 FY24 Q1’FY25 Q1’FY24 AUM (INR Cr) 9,047 9,218 6,777 36% Net Disbursement (INR Cr)* 5,867 1,146 1,284 11% Annualised EPS Off-book AUM (%) 45% 45% 43% 141 bps of Q1’FY25: INR 13.3 per share Net Total Income %$ 13.5% 11.7%# 12.5%# 75 bps Pre-Tax Profit (INR Cr) 179 43
Slide 6: Key metrics for Q1'FY25
Key metrics for Q1’FY25 01 Asset 02 03 Asset 04 Liability & Profitability Growth Quality Co - lending AUM Net Total Income GNPA Borrowings As on Jun’24 : 9,218 Cr Q1’FY25 : 165.4 Cr As on Jun’24 : 2.0% As on Jun’24 : 4,529 Cr (+36% Y-o-Y) (+32% Y-o-Y) (+20 bps Y-o-Y) Co-lending Net Loans Originated
Slide 7: We continue to deliver strong Net Loan Origination
We continue to deliver strong Net Loan Origination Amount in INR Cr 1,359 1,653 1,874 2,314 2,036 2,506 2,810 2,864 1,841 Gross Loans Originated 1,554 1,552 1,459 1,477 322 1,284 261 1,146 193 209 1,166 156 1,100 173 172 167 225 227 148 85 -89 196 917 193 109 153 52 134 16 203 -184 206 188 180 143 1
Slide 8: And strong AUM
And strong AUM Amount in INR Cr AUM increased to INR 9,218 Cr as on Q1’FY25 from INR 9,047 Cr as on Q4’FY24 and INR 6,777 Cr as on Q1’FY24 (+36%) 36% 9,218 9,047 8,364 1,108 12% 1,112 7,592 967 1,168 1,253 14% 6,777 849 1,037 6,081 439 5% 750 11% 893 632 722 895 10% 715 798 12% 813 5,095 670 721 701
Slide 9: Our collection efficiencies and portfolio performance remains stable
Our collection efficiencies and portfolio performance remains stable Collection Efficiency remains robust ECL Data (Jun’24) (In Cr) Loan Exposure Loan Exposure (%) Total Collections* (including overdue) / Current Month Demand Stage 1 8,589 93.2% Stage 2 443 4.8% 98% 98% Stage 3 187 2.0% 97% 96% 96%
Slide 10: Our collection efficiencies and portfolio performance remains stable
Our collection efficiencies and portfolio performance remains stable Stage 1 reaching stable state Provision Coverage Ratio 95% 95% 94% 94% 93% 48% 49% 49% 48% 47% June'23 Sep'23 Dec'23 Mar'24 Jun'24 Jun'23 Sep'23 Dec'23 Mar'24 Jun'24 • Stage 1 assets have been at ~95% over past 5 quarters • Stage 3
Slide 11: Unique capital light liability strategy
Unique capital light liability strategy Demonstrated ability to manage a prudent mix of on-balance sheet and off-balance sheet approach On-Balance sheet Diversified Lender base across Lending Co-Lending with Banks/NBFCs Institutions – Banks, Large NBFCs and Partnership with PSBs, Pvt. Banks and Larg
Slide 12: Diversified Lender base and continued build-out of liability book
Diversified Lender base and continued build-out of liability book Total Debt (INR Cr) and Cost of borrowings Liability mix by lender profile Liability mix by product 10.7% 10.6% 10.7% 10.7% 10.7% 2% 19% 3% Cost of Borrowings 4,653 4,529 4,173 3,798 3,342 41% 29% 7% Total Debt INR Total Debt INR 4,52
Slide 13: Robust momentum of our co-lending platform continues
Robust momentum of our co-lending platform continues Increasing Mix of off - Book AUM Product wise Mix of off - Book AUM (Jun’24) On Book Portfolio Off Book Portfolio 2,451 3,073 895 439 1,253 1,108 1% 1% 35% 43% 45% 45% 45% 45% 52% 46% 42% 40% 61% 99% 99% 48% 54% 58% 39% Secured Business Micro Supply
Slide 14: Finance | Income Statement
Finance | Income Statement Income Statement (₹ Cr) Q1’FY25 Q1’FY24 Y-o-Y Q4’FY24 Q-o-Q ROA Tree Q1’FY25* FY24 Interest Income 232.0 161.5 44% 190.3 22% As a % of Gross On Book AUM Income on Co-Lending / Direct 50.4 43.8 15% 122.4 (59%) Total Income 21.3% 22.9% Assignment Other Income 19.2 13.0 48% 1
Slide 15: Long-term sustainable strategy
Long-term sustainable strategy ~30% Loan Growth on a Sustained Basis >~18% ~50% ROE Off-Book AUM >~4% <~45% ROA Cost to Income Ratio <~2% Credit cost Slide 14
Slide 16: Our journey to 4% RoA
Our journey to 4% RoA Change of ~160 bps 2.3% 150 75 50 50 ~4% RoA bps bps bps bps RoA FY24 YIELD COST OF BORROWING OPERATING LEVERAGE CREDIT COST In ~8 EXPANSION DECREASE INCREASE Quarters Micro loan mix Aided by scale, On the back of increase (branch capital raise, Portfolio seasoning strong AUM a
Slide 17: UGRO Overview
GRO UGRO Overview Slide 16
Slide 18: Building a large institution for MSME financing is a real possibility
Building a large institution for MSME financing is a real possibility Explosion of Credit in MSME Segment: Large market opportunity, conducive macro, favorable policy framework Total MSME Credit gap is INR 92 trn Credit Gap of our customer segment constitutes 95% FY17 FY24 Medium Enterprise No. of e
Slide 19: MSME Credit Opportunity is large and growing
MSME Credit Opportunity is large and growing… Credit demand is projected to stay strong, especially in MSMEs Credit demand indicating an expansion of 15% by FY25 Small Business Loans to grow at 15% CAGR over FY23 to FY26 CAGR 15% CAGR 15% 23 17.7 20 15.8 16 13.8 11.7 10 9.3 7.4 8 5.9 6.6 NBFC FY19 F
Slide 20: Well supported by continuity in Government initiatives
…well supported by continuity in Government initiatives Government Initiatives throughout the years Financial Support for MSME Growth - 2024 • 2014 - Pradhan Mantri MUDRA Yojana (PMMY) Budget Allocation • For Ministry of MSME: INR 22k Crores • 2015 - Udyog Aadhaar Memorandum (UAM) • Funds for centra
Slide 21: UGRO's journey of Data-Tech driven lending to MSMEs over 5+ yrs
UGRO’s journey of Data-Tech driven lending to MSMEs over 5+ yrs Build phase Early Validations Maturing phase Growth Phase Data Repository- Jun’24 Infrastructure build at inception during Covid, pivoted At Dec 2022, 87% of long term portfolio Become an industry to cash flow based underwriting models
Slide 22: Our Distribution continues to be powered by our GRO Score
Our Distribution continues to be powered by our GRO Score Ability to capture alternate data from banking and bureau… …to draw meaningful insights out of unorganized data... Artificial Intelligence GRO 2.0 GRO 3.0 Engineering of making Intelligent Credit Bureau Machines and Programs Credit Across Mul
Slide 23: GRO Score – Risk Bands Stacking up on Historical Portfolio
GRO Score – Risk Bands Stacking up on Historical Portfolio Default rates across score bands – All customers assessed Since Inception Score Band wise break up of recent disbursals (Jan 24 – Jun 24) 2.7% 4% 11% 1.6% 1.6% A+&A 1.3% 45% B 1.0% 17% GRO Score A+ to C 0.9% 0.7% ~85% C 0.5% D E 23% A+&A B C
Slide 24: Sector Focused Approach, Multiple Products and Large Distribution Strength
Sector Focused Approach, Multiple Products and Large Distribution Strength Micro Enterprises Retailer 23 Finance Prime Branches Light Engineering Secured Business Loans 141 Auto Components Micro Branches Business Chemicals Loans 650+ GRO Partners Our Product Food Processing Offering 65+ Anchors Educ
Slide 25: We serve a diverse set of customers with multi-product strategy
We serve a diverse set of customers with multi-product strategy GRO line Prime Intermediated: Micro: Tier 3-6 Ecosystem Channel & Direct & Digital Metro & Tier 1/2 Branches Green Asset Financing Alliances Branches Collateral: Prime Property Collateral: Collateral:Standard StandardProperty Property C
Slide 26: Resulting in a well diversified, granular and stable portfolio quality
Resulting in a well diversified, granular and stable portfolio quality Product Mix (AUM) Portfolio Concentration in key geographical areas Sector Mix State wise AUM 12% coverage 7% 27% 1% 16% 4% 1% 14% 19% 8% 6% 5% 10% 1% 8% 8% 10% 20% 24% 9% 11% 23% 5% Rest of India – 1% 8% 2% Guaranteed by CGTMSE
Slide 27: Board, Management and Shareholding
Board, Management and Shareholding Slide 26
Slide 28: Institutionally Owned: Majority held by Institutional Investors
Institutionally Owned : Majority held by Institutional Investors Shareholding Pattern as of Jun’24 Fully diluted shareholding pattern* (Investment arm Other Public shareholders, 29.4% 10.5% of Denmark govt.) (Investment arm of Other Public 40k+ shareholders 16.4% shareholders, 26.2% Denmark govt.) 1
Slide 29: We are Independently supervised by eminent Board of Directors
We are Independently supervised by eminent Board of Directors Non-Executive Chairman Satyananda Mishra Chairman, Corporate Social Responsibility Committee Ex-Chairman- MCX, Ex-CIC, GOI, Ex-Director - SIDBI Independent Directors Karnam Sekar Hemant Bhargava Rajeev K. Agarwal S. Karuppasamy Tabassum I
Slide 30: With strong corporate governance framework enshrined in the Articles
With strong corporate governance framework enshrined in the Articles ▪ High degree of regulatory oversight and transparency ▪ Reputed Audit Firm to be appointed as the statutory ▪ An institution created with a long-term view, designed auditors for continued operational efficiency ▪ Sharp and Tannan
Slide 31: Professionally Managed: Leadership team has 165+ years of cumulative experience
Professionally Managed: Leadership team has 165+ years of cumulative experience Shachindra Nath - Founder & Managing Director 26+ Years of diversified financial services experience across asset management, lending, capital markets & insurance Amit Mande Anuj Pandey Kishore Lodha Chief Revenue Office
Slide 32: Leadership is supported by strong second layer of management
Leadership is supported by strong second layer of management Monika Kapoor J Sathiayan Ajit Kumar Tanya Chadha CBO - Intermediated Business CBO - Micro Enterprises CBO - Equipment Finance CBO - Digital Business 21+ Years of Experience 25+ Years of Experience & Green Asset Financing & Alliances 25+ Y
Slide 33: Thank You
Thank You www.ugrocapital.com Slide 32