Ugro Capital Limited · NSE:UGROCAP
Ugro Capital — Q3 FY25 Earnings Presentation
47 slides from Ugro Capital's earnings presentation, Jan 24, 2025
Slide 1: Cover letter to stock exchanges
24th January 2025 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 t
Slide 2: UGRO Capital Limited Q3'FY25 Earnings Presentation
UGRO Capital Limited Building an Institution for MSME Lending Data Tech Empowering Small Businesses (MSME) Lending Q3’FY25 Earnings Presentation 24 January 2025 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: Q3'FY25 Snapshot: Record Growth through Expansion and Strategic Initiatives
Q3’FY25 Snapshot: Record Growth through Expansion and Strategic Initiatives Consecutive highest Quarter: Successful initiation in the Focus on Emerging Market (EM) embedded finance disbursements: channel(2): INR 2,098 Cr compared to INR 1,971 Cr in Q2’FY25 and INR 1,552 MSL acquisition(1) has delive
Slide 5: Performance snapshot for Q3'FY25/9M'FY25
Performance snapshot for Q3’FY25/ 9M’FY25 Q3’FY25 Q3’FY24 9M’FY25 9M’FY24 AUM (INR Cr) 11,067 8,364 32% 11,067 8,364 32% Net Disbursement (INR Cr)(1) 2,098 1,552 35% 5,215 4,311 21% Annualized EPS of 9M’FY25(4) Off-book AUM 44% 45% 71 bps 44% 45% 71 bps INR 15.0 per share Net Total Income %(2) 12.8%
Slide 6: Key metrics for Q3'FY25/9M'FY25
Key metrics for Q3’FY25/ 9M’FY25 01 Asset 02 03 Asset 04 Liability & Profitability Growth Quality Co - lending AUM Net Total Income GNPA Borrowings As of Dec’24 : 11,067 Cr Q3’FY25 | 9M’FY25: As of Dec’24 : 2.1% As of Dec’24 : 6,151 Cr (+32% Y-o-Y) 218 Cr | 583 Cr (Dec’23: 2.0%) (+34% | +34% Y-o-Y)
Slide 7: Serving a diverse set of customers with multi-product, multi-channel strategy
Serving a diverse set of customers with multi-product, multi-channel strategy UGRO’s Focus GRO line Prime Intermediated: Emerging Market: Tier 2 & Ecosystem Channel & Direct & Digital Alliances Metro & Tier 1/2 Branches beyond branches Green Asset Financing Collateral: Prime Property (For Collateral
Slide 8: Emerging Market Snapshot - Y-o-Y
Emerging Market Snapshot- Y-o-Y 9M’ FY24 9M’FY25 Quarterly trends- Last 5 quarters Strategy- Current/ Target # of branches: # of branches 81 201 148% • Target to increase the number of branches to 400 by March 2026 and increase geographical # of states 7 11 57% 187 201 presence in another 2-3 states
Slide 9: Embedded finance platform (MSL) acquisition tracking as per plan
Embedded finance platform (MSL) acquisition tracking as per plan Embedded finance ecosystem and potential MSL Performance so far.. • Our targeted acquisition of the embedded finance 65mn $22bn+ platform (MSL) has tracked to the right scale. Total Merchants Annual Credit Requirement • We have seen go
Slide 10: Our collection efficiencies and portfolio performance remains stable
Our collection efficiencies and portfolio performance remains stable Collection Efficiency remains robust ECL Data (Dec’24) (In Cr) Loan Exposure Loan Exposure (%) Total Collections* (including overdue) / Current Month Demand Stage 1 10,341 93.5% Stage 2 488 4.4% 98% Stage 3 237 2.1% 96% 96% 96% 96%
Slide 11: Our collection efficiencies and portfolio performance remains stable
Our collection efficiencies and portfolio performance remains stable Stable Stage 1 assets Stable Stage 3 assets 95% 94% 94% 93% 94% 94% 2.0% 2.0% 2.0% 2.1% 2.1% 1.9% Sep'23 Dec'23 Mar'24 Jun'24 Sep'24 Dec'24 Sep'23 Dec'23 Mar'24 Jun'24 Sep'24 Dec'24 Adequate Provision Coverage Ratio 49% 49% 48% 47%
Slide 12: 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 13: Overall off book ratio maintained
Overall off book ratio maintained High proportion of off - Book AUM mix Product wise Mix of off - Book AUM (Dec’24) On Book Portfolio Off Book Portfolio 3,042 3,353 1,362 309 1,500 1,199 302 0% 8% 39% 100% 48% 61% 51% 43% 45% 45% 45% 45% 44% 44% 100% 92% 52% 61% 49% 39% Secured Business Emerging Suppl
Slide 14: 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 10.65% 10.70% 10.73% 10.75% 10.68% 3% 4% Cost of Borrowings 6,151 19% 5,344 4,653 4,529 25% 4,173 5% Total Debt Total Debt 49% INR 6,1
Slide 15: Finance | Income Statement
Finance | Income Statement Income Statement (₹ Cr) Q3’FY25 Q3’FY24 Y-o-Y Q2’FY25 Q-o-Q Annualised ROA Tree Q3’FY25 9M’FY25 Interest Income 254.4 181.1 41% 208.0 22% As a % of Gross On Book AUM Income on Co-Lending / Direct 103.6 76.4 36% 109.5 (5%) Total Income 22.7% 21.7% Assignment Other Income 26
Slide 16: Operating & Financial Metrics
Operating & Financial Metrics Total Income (INR Cr) & Portfolio Yield$ Finance Cost (INR Cr) & Cost of Borrowing Operating Exp. (INR Cr) and Cost to Income 17.7% 17.7% 17.8% 18.2% 10.65% 10.70% 10.73% 10.75% 10.68% 53.1% 52.0% 54.1% 52.7% 56.6% 17.5% 16.6% 16.7% 16.7% 16.7% 16.3% 167 123 136 143 105
Slide 17: We continue to work towards 4% ROA
We continue to work towards 4% ROA Change of ~160 bps 2.3% 150 75 50 50 ~4% RoA bps bps bps bps RoA YIELD COST OF BORROWING OPERATING LEVERAGE CREDIT COST EXPANSION DECREASE INCREASE Emerging Market Aided by scale, On the back of LAP mix increase capital raise, Portfolio strong AUM led by branch vin
Slide 18: MSME lending: The largest opportunity today
MSME lending : The largest opportunity today Slide 17
Slide 19: 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% ~8 – 10 Crore MSMEs MSME MSME 35-40% 35-40% ~25 Crore employment ~20-22 Crore employment ~30% of GDP ~30-40% of GDP MSME sector expected to grow to USD
Slide 20: 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 19
Slide 21: …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 22: 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 1,03,000 Bn Credit Gap of our customer segment constitutes majority portion Overall MSME Credi
Slide 23: UGRO Capital: Well-placed to capitalize on the opportunity
UGRO Capital: Well-placed to capitalize on the opportunity MSME Focused Lender targeting Analytics Powered Pan-India Presence large credit gap Targeting MSME sector which has India’s trailblazing data-driven Extensive network pan India, with substantial credit gap of ~INR 103 cashflow based underwri
Slide 24: UGRO's Data & Tech driven approach
UGRO’s Data & Tech driven approach Slide 23
Slide 25: 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- Dec’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 26: 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 27: 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 (Jul 24 – Dec 24) 3.0% 4% 9% 1.8% 1.9% A+&A 12% 1.4% 44% 1.2% B GRO Score A+ to C 1.0% 0.8% ~87% C 0.7% D 31% E A+&A B C
Slide 28: Our System Architecture supports full SME lending
Our System Architecture supports full SME lending Secured Factoring P&M Loans OD product EV / Solar Digital Finance Co-lending Embedded Business Loan Finance GSTN Bureau + Banking Bureau + Banking + GSTN GROSCORE GROSCORE 2.0 3.0 UGRO’S PROPRIETARY TECH CAPABILITY Co-lending Supply Chain D2C Offerin
Slide 29: Multi-product, multi-channel Asset Engine
Multi-product, multi-channel Asset Engine Slide 28
Slide 30: Serving a diverse set of customers with multi-product, multi-channel strategy
Serving a diverse set of customers with multi-product, multi-channel strategy GRO line Prime Intermediated: Emerging Market: Tier 2 & Ecosystem Channel & Direct & Digital Alliances Metro & Tier 1/2 Branches beyond branches Green Asset Financing Collateral: Prime Property (For Collateral: Collateral:
Slide 31: Sector Focused Approach, Multiple Products and Large Distribution Strength
Sector Focused Approach, Multiple Products and Large Distribution Strength Emerging Market Retailer 23 Finance Prime Branches Light Engineering Business Loan Secured by Property 201 Auto Components EM Branches Business Chemicals Loan 730+ GRO Partners Our Product Food Processing Offering 10+ Green A
Slide 32: Highest-ever Net Loan Origination (Channel wise Q-o-Q)
Highest-ever Net Loan Origination (Channel wise Q-o-Q) Amount in INR Cr Disbursement is up 35% YoY; Disbursement excluding Supply Chain Financing(1) is up 44% YoY 1,971 2,098 335 277 1,554 233 1,552 291 1,459 1,477 322 1,146 -98 260 1,284 209 261 193 -61 1,166 156 456 173 172 167 225 227 148 109 85
Slide 33: Strong AUM Growth Trend (Product wise Q-o-Q)
Strong AUM Growth Trend (Product wise Q-o-Q) Amount in INR Cr AUM increased to INR 11,067 Cr as of Dec’24 from INR 10,157 Cr as of Sep’24 and INR 8,364 Cr as of Dec’23 (+32%) 32% 11,067 302 3% 10,157 1,199 11% 9,047 9,218 1,184 8,364 1,500 14% 1,112 1,108 7,592 1,391 967 12% 309 3% 6,777 - 1,253 355
Slide 34: Well diversified, granular and stable portfolio quality
Well diversified, granular and stable portfolio quality Product Mix (AUM) Portfolio Concentration in key geographical areas Sector Mix 3% State wise AUM 11% coverage 7% 1% 27% 1% 17% 4% 14% 1% 17% 5% 8% 3% 10% 4% 7% 3% 12% 18% 21% 5% 11% 12% 3% Rest of India < 1% 9% 2% 27% Guaranteed by CGTMSE Secur
Slide 35: Shareholding, Board, and Management
Shareholding, Board, and Management Slide 34
Slide 36: Institutionally Owned: Majority held by Institutional Investors
Institutionally Owned: Majority held by Institutional Investors Shareholding Pattern as of Dec’24 Fully diluted shareholding pattern* (Investment arm Other Public shareholders, 29.5% 10.5% of Denmark govt.) (Investment arm of Other Public 39k+ shareholders 16.4% shareholders, 26.3% Denmark govt.) 10
Slide 37: 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 38: With 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 39: 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 40: 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 – Emerging Market CBO - Equipment Finance CBO - Digital Business 21+ Years of Experience 25+ Years of Experience & Green Asset Financing & Alliances 25+ Yea
Slide 41: Understanding Co-lending
Understanding Co-lending Note: This section is only for learning & illustration purpose Slide 40
Slide 42: RBI Guidelines on Co-lending
RBI Guidelines on Co-lending RBI circular dated November 05, 2020 1➢ Loan sanction - Joint contribution of credit by banks and NBFCs 2➢ Interest rate - Blended rate to be offered to customers 3➢ Common Escrow Account: The Bank and the NBFC shall open common escrow account for disbursal as well as re
Slide 43: Co-origination Process Framework - CLM 1
Co-origination Process Framework - CLM 1 Documentation: ➢ Co-Branded Sanction letter issued to the customer post approval by both the lenders. NBFC funding Bank funding ➢ Customer signs agreement with both the lenders. ➢ Security (if any) to be created in favor of both the lenders on pari passu basi
Slide 44: Co-Lending Process Framework - CLM 2 (akin to Direct Assignment)
Co-Lending Process Framework - CLM 2 (akin to Direct Assignment) 1 Customer Documentation: CaseCase underwritten andand underwritten disbursed by UGRO disbursed andand by NBFC shared shared with with partner as per the common lending policy bank as per the common lending policy 2 ➢ Sanction letter,
Slide 45: Co-Lending model is a win-win combination for Banks, NBFCs & Customers
Co-Lending model is a win-win combination for Banks, NBFCs & Customers Benefits for various stakeholders ▪ Expand distribution in ▪ Access to higher liquidity at ▪ Access to credit particularly under-served areas at competitive cost for under-served segments minimal opex. and geographies with ▪ Enab
Slide 46: Direct Assignment (DA) vs Co-Lending akin to DA
Direct Assignment (DA) vs Co-Lending akin to DA Particular Direct Assignment (DA) Co-lending akin to DA Forms part of Gross Loans (Balance Sheet) for Only 10% share Only the 20% (self-funded) portion of the loan Originator Originating NBFC and funding Bank agree on a common lending policy Underwriti
Slide 47: Thank you
Thank you www.ugrocapital.com Slide 46