Ugro Capital Limited · NSE:UGROCAP
Ugro Capital — Investor Presentation (August 2024)
47 slides from Ugro Capital's investor presentation, Aug 6, 2024
Slide 1: Intimation of Investor Presentation
6th August 2024 BSE Limited National Stock Exchange of India Limited Phiroze Jeejeebhoy Towers Exchange Plaza, 5th Floor, Plot No. C/1, G Block, Bandra - Kurla Complex, Dalal Street, Mumbai 400 001 Bandra (E), Mumbai - 400 051 Scrip Code: 511742 NSE Symbol: UGROCAP Sub: Intimation of Investor Presen
Slide 2: Building an Institution For MSME Lending
Building an Institution For MSME Lending Data Tech Empowering Small Businesses (MSME) Lending NSE: UGROCAP | BSE: 511742
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: MSME lending: The largest opportunity today
MSME lending : The largest opportunity today
Slide 5: For India's GDP to reach USD 5 trillion, MSME sector has to reach USD 2 trillion
For India’s GDP to reach USD 5 trillion, MSME sector has to reach USD ~2 trillion Today India’s GDP in FY2028 FY2028 MSME ~6.3 Crore MSMEs 35 – 40% ~10 Crore MSMEs MSME MSME 35-40% 35-40% ~15 Crore employment ~20-22 Crore employment ~30% of GDP ~30-40% of GDP MSME sector expected to grow to USD ~2 t
Slide 6: MSME sector is the key to India's Employment Generation
MSME sector is the key to India’s “Employment Generation”, making it one of the Central themes of Government in the last decade MSME count to grow to ~10 crores employing 20-22 crores
Slide 7: 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 8: 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 9: Data & Tech driven approach
GRO O Data & Tech driven approach
Slide 10: India's data repository will support data driven MSME credit expansion
India’s data repository will support Data driven MSME credit expansion Increasing MSME Data availability is a key lever India Data Stack 360-degree underwriting is possible INCREASE IN GST PAYERS 100% 16x Monthly UPI VOLUMES Sector - subsector Up from 70L in 2017 to Up from 800 Mn in Mar’19 to 146L
Slide 11: 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 12: Data driven by AI/ML powers our core underwriting
Data driven by AI/ML powers our core underwriting : 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 Multiple
Slide 13: Advent of alternate data is revolutionizing underwriting of MSMEs
Advent of alternate data is revolutionizing underwriting of MSMEs A combination of bureau, banking and GST makes it possible to cover all aspects that are critical for MSMEs’ financial assessment Massive library of 20,000+ parameters derived Enabling holistic underwriting Through statistically devel
Slide 14: Our Tech Platforms support operational efficiencies across all facets of business
Our Tech Platforms support operational efficiencies across all facets of business Secured Factoring P&M Loans Embedded Business Loan OD product EV / Solar Digital Finance Co-lending Finance GSTN Bureau + Banking Bureau + Banking + GSTN GROSCORE GROSCORE 2.0 3.0 UGRO’S PROPRIETARY TECH CAPABILITY Co-
Slide 15: Our Asset Engine
GRO O @ Our Asset Engine
Slide 16: 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 17: India's truly national foot-print MSME lender
India’s truly national foot-print MSME lender Expanding ground presence to reach ~285 branches, across 15 states, by Mar’25 UGRO to have ~285 branches by Mar’25 1 1 States Mar’25E Branches 5 11 Tamil Nadu 51 Madhya Pradesh 38 32 21 Andhra Pradesh 37 Maharashtra 36 Rajasthan 32 16 38 1 1 Telangana
Slide 18: UGRO Capital – Partner Network
UGRO Capital – Partner Network 70+ OEM’s 65+ Anchors 45+ Partners 650+ GRO Partners
Slide 19: 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 Business Loans Secured by Property 141 Auto Components Micro Branches Business Chemicals Loans 650+ GRO Partners Our Product Food Processing Offering 65+
Slide 20: Unique capital-light liability strategy
Unique capital-light liability strategy
Slide 21: We have a unique capital light liability strategy
We have a 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. Bank
Slide 22: 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 23: 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 24: Executing The big plan…
Executing The big plan…
Slide 25: UGRO has withstood challenges, continue to deliver
UGRO has withstood challenges, continue to deliver Amount in INR Cr Series of Credit Crises Increasing Equity raise of • ILFS Interest Rate & INR 1,265 Cr • DHFL Global inflation Equity raise of • Yes Bank INR 340 Cr 9,218 Cr Russia Ukraine Covid – 19 War 9,047 Cr Developed Sectoral Expertise Wave 2
Slide 26: 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
Slide 27: …and rapidly grow our AUM
…and rapidly grow our AUM Fastest to reach USD 1 bn AUM club 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%) INR Crores 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 8
Slide 28: Rapid growth is backed by stable asset quality
Rapid growth is backed by stable asset quality… 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 PCR has averaged at
Slide 29: …driven by stable collection efficiencies
…driven by stable collection efficiencies… 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% Stage 3 187 2.0% 98% 97% 98% Total 9,218 100.0% 96% 96% 96% Pro
Slide 30: 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 31: Financial Highlights
Financial Highlights Q1’FY25 Q1’FY24 FY24 FY23 AUM (INR Cr) 9,218 6,777 36% 9,047 6,081 Net Disbursement (INR Cr)* 1,146 1,284 11% 5,867 4,641 Annualised EPS Off-book AUM (%) 45% 43% 141 bps 45% 40% of Q1’FY25: INR 13.3 Net Total Income %$ 11.7%# 12.5%# 75 bps 13.5% 12.2% per share Pre-Tax Profit (I
Slide 32: Q1'FY25 Income Statement and RoA Tree
Finance | Q1’FY25 Income Statement and RoA Tree 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 Total Income 21.3% 22.9% 50.4 43.8 15% 122.4 (59%) Assignment Other I
Slide 33: What does this culminate into?
What does this culminate into?
Slide 34: 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, increase from 9% On the back of capital raise, Portfolio of AUM currently stron
Slide 35: Long term sustainable strategy
Long term sustainable strategy ~30% Large TAM, growth across products, particularly Micro Loan Growth on a Sustained Basis Increase from 45% Assuming debt/equity of 3.5x >~18% ~50% in FY24, tapping strong co-lending ROE Off-Book AUM demand Increase from 2.3% in FY24 (journey >~4% <~45% Decrease from
Slide 36: Evolution, Shareholding, Board, and Management
Evolution, Shareholding, Board, and Management
Slide 37: Our Capital Raises have been geared to create a Large Institution
Our Capital Raises have been geared to create a Large Institution Acquisition of Chokhani Securities INR 1,265 Crores through Capital Commitment Raised INR 916 Cr capital from Institutional / PE (CCDs + Warrants) Investors (2024E infusion from CCDs (100%) + Warrants (25%): ~INR 510 Cr; Balance withi
Slide 38: 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 39: 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 40: Strong corporate governance framework enshrined in the Articles
With strong corporate governance framework enshrined in the Articles ▪ Reputed Audit Firm to be appointed as the statutory auditors ▪ High degree of regulatory oversight and transparency ▪ Sharp and Tannan appointed as the statutory auditor ▪ An institution created with a long-term view, designed an
Slide 41: 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 42: 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 43: UGRO Impact
O = 14 . UGRO Impact
Slide 44: UGRO Capital Social Impact Report 2023-24
UGRO Capital Social Impact Report 2023-24 UGRO Capital: Creating a strong social impact since inception U GRO Capital Social Impact Report 2023-24
Slide 45: UGRO's Impact journey from Previous report (1/2)
UGRO’s Impact journey from Previous report (1/2) CURRENT PREVIOUS UN SDG PARTICULARS (2023-24) (2022) 1. Percentage of female borrowers who are owners 9% NA 2. Percentage of female borrowers who are owner/co-owner 72% NA Increase in revenue of borrowers (based on impact survey) 94% 80% AUM of portfo
Slide 46: UGRO's Impact journey from Previous report (2/2)
UGRO’s Impact journey from Previous report (2/2) CURRENT PREVIOUS UN SDG PARTICULARS (2023-24) (2022) AUM in healthcare industry 374 Cr 142 Cr AUM in clean water and sanitation industry 151 Cr - AUM in clean energy industry 134 Cr 9 Cr AUM in education industry 97 Cr 142 Cr U GRO Capital Social Impa
Slide 47: Thank you
Thank you www.ugrocapital.com Slide 46