Ugro Capital Limited · NSE:UGROCAP
Ugro Capital — Q1 FY2024 Earnings Presentation
36 slides from Ugro Capital's earnings presentation, Aug 1, 2023
Slide 1: UGRO Capital Limited Q1'FY24
UGRO Capital Limited Q1’FY24 EMPOWERING MSME ECOSYSTEM NSE: UGROCAP | BSE: 511742 Slide 1
Slide 2: 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 3: Building a large institution for small business financing is a real possibility
Building a large institution for small business financing is a real possibility Explosion of Credit in MSME Segment: INR 85 Trn MSME Credit Gap Presents a large Market Opportunity MSME credit has increased at a healthy pace.. …however, the overall MSME Credit Gap has also increased INR Trillion MSME
Slide 4: India Data Repository: Supporting the Small Business Credit Revolution
India Data Repository : Supporting the Small Business Credit Revolution Increasing MSME Data availability INCREASE IN GST PAYERS Up from 70L in 2017 to 50% 12x Monthly UPI VOLUMES Up from 7,995L in Mar’19 to 140L in 2022 93,351L in Jun’23 UDYAM REGISTRATION Up from 14L in Dec’20 to 13x 37% ITR FILED
Slide 5: Machine learning: Robust IP development backed by fundamental capability and infrastructure
Machine learning: Robust IP development backed by fundamental capability and infrastructure DATA INGESTION FEATURE ENGINEERING MODEL DEVELOPMENT MODEL DEPLOYMENT • API integrated data sources • Centralized processed data • Proprietary model inventory • Central Rule Engine layer • Partner expertise f
Slide 6: 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 22 – Dec 22) 3.6% 3.4% 8% 2.7% 1% 5% 2.0% A B 1.4% GRO Score A & B C ~86% 55% D 0.7% 0.8% 31% 0.5% E A B C D,E Disbu
Slide 7: Our Data Tech, Machine Learning, LaaS and Diversified Distribution
Our Data Tech, Machine Learning, LaaS and Diversified Distribution: How it would benefit Shareholders We will achieve by 2025… ~30% Loan Growth on a Sustained Basis >~18% ~50% ROE Off-Book AUM >~4% <~45% ROA Cost to Income Ratio <~2% Credit cost
Slide 8: Business Metrices in line with long term goal
Business Metrices in line with long term goal Credit Cost has remained stable 1.1% 1.3% 1.3% 21 17 9 Increasing Off Book Aum Mix Cost To Income Ratio Is decreasing Q1'FY23 Q4'FY23 Q1'FY24 Credit Cost Credit Cost/ Avg Total AUM 72% 56% 55% 40% 43% 74 69 51 21% 3 Q1'FY23 Q4'FY23 Q1'FY24 2 ~<2% 4 Q1'FY
Slide 9: Performance Highlights for Q1'FY24
Performance Highlights for Q1’FY24 01 Asset 02 03 Asset 04 Liability & Profitability Growth Quality Co - lending AUM Net Total Income GNPA Borrowings As on Jun’23 : 6,777 Cr Q1’FY24 : 125.6 Cr As on Jun’23 : 1.8% As on Jun’23 : 3,342 Cr (+11% Q-o-Q) (-1% Q-o-Q) (+20 bps Q-o-Q) (60+ lenders) (+85% Y-
Slide 10: Performance Highlights for Q1'FY24
Performance Highlights for Q1’FY24 FY23 Q1’FY24 Q1’FY23 AUM (INR Cr) 6,081 6,777 3,656 85% Annualized EPS on current rate Net Disbursement (INR Cr)* 4,641 1,284 917 40% INR 11.34 per share for Q1’FY24 Jun’23 Off-book AUM 40% 43% 21% 105% Net Total Income % 12.2% 12.5% 10.2% 22% Book Value per Share
Slide 11: AUM Trend (Product wise Q-o-Q)
AUM Trend (Product wise Q-o-Q) Amount in INR Cr AUM increased to INR 6,777 Cr as on Jun’23 from INR 6,081 Cr as on Mar’23 (+11%) and INR 3,656 Cr as on Jun’22 ( +85%). 85% 11% 6,777 6,081 750 11% 715 798 12% 5,095 701 585 9% 4,375 746 567 548 8% 3,656 718 564 472 465 458 2,970 620 17% 338 2,109 2,58
Slide 12: Gross Loan Origination (Product wise Q-o-Q)
Gross Loan Origination (Product wise Q-o-Q) Amount in INR Cr Gross loans originated increased to INR 2,036 Cr in Q1’FY24 from INR 1,359 Cr in Q1’FY23 (+50%). 2,314 193 50% 2,036 1,874 173 172 8% 1,653 148 153 8% 134 193 1,359 963 126 143 10% 769 38% 1,053 119 9% 775 962 610 789 199 107 508 37% 206 1
Slide 13: Net Loan Origination (Product wise Q-o-Q)
Net Loan Origination (Product wise Q-o-Q) Amount in INR Cr Net loans originated increased to INR 1,284 Cr in Q1’FY24 from INR 917 Cr in Q1’FY23 (+40%). 1,459 40% 193 1,284 1,164 1,100 173 172 13% 148 109 153 12% 917 193 134 16 1% 817 206 151 12% 143 15% 126 65 58 136 642 199 611 119 13% 7% 120 66 70
Slide 14: Operating & Financial Metrics
Operating & Financial Metrics Total Income (INR Cr) & Portfolio Yield$ Finance Cost (INR Cr) & Cost of Borrowing Operating Expenses (INR Cr) and Cost to Income 17.3% 17.4% 17.3% 17.3% 72.1% 63.9% 10.66% 62.9% 55.9% 55.0% 16.7% 10.47% 10.48% 10.53% 10.58% 16.1% 16.3% 16.0% 69 74 69 15.7% 90 93 15.4%
Slide 15: Portfolio Performance
Portfolio Performance Slide 15
Slide 16: Well Diversified and Granular Portfolio
Well Diversified and Granular Portfolio Product Mix (AUM) Portfolio Concentration in key geographical areas Sector Mix* State wise AUM 11% coverage 1 6% 16% 5% 29% 17% 12% 2% 9% 7% 9% 10% 6% 8% 16% 10% 23% 31% 12% 9% 6% Prime - Secured Loans Prime - Unsecured Loans 15% 3% Micro Enterprise Loan Suppl
Slide 17: Collection Efficiencies, Portfolio provisioning (1/2)
Collection Efficiencies, Portfolio provisioning (1/2) Current Month and Overall Collection Efficiency remains robust ECL Data (Jun’23) Current Month Collection (excluding overdue) / Current Month Demand (In Cr) Loan Exposure Loan Exposure (%) Total Collections* (including overdue) / Current Month De
Slide 18: Collection Efficiencies, Portfolio provisioning (2/2)
Collection Efficiencies, Portfolio provisioning (2/2) Stage 1 has remained stable over last 5 quarters Provision Coverage Ratio 96% 96% 96% 96% 49% 48% 95% 38% 32% 28% June'22 Sep'22 Dec'22 Mar'23 June'23 June'22 Sep'22 Dec'22 Mar'23 June'23 Restructured Loans (standard portfolio) 2.7% 1.9% 1.5% 1.1
Slide 19: Liability Update
GRO Liability Update Slide 19
Slide 20: Tri-pronged liability strategy – on-balance sheet, co-lending and assignment
Tri-pronged liability strategy – on-balance sheet, co-lending and assignment Demonstrated ability to manage a prudent mix of on-balance sheet and off-balance sheet approach 1 On-Balance sheet Diversified Lender base across Lending Institutions – Banks, Large NBFCs and DFIs. Multi product approach th
Slide 21: 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 No. of Active Lenders Cost of Borrowing Liability Mix 0% 55 63 67 66 62 4%2% Count of Lenders 3,342 22% 3,149 2,725 2,885 Total Debt INR 2,208 10.53% 10.58% 10.66% 3,342 Cr 10.47% 10.48% 72% Term Loan NCD Secur
Slide 22: Lending as a Service (L-a-a-S) platform
Lending as a Service (L-a-a-S) platform Increasing Mix of off - Book AUM Product wise Mix of off - Book AUM (Jun’23) 1,986 2,109 548 585 798 750 On Book Portfolio Off Book Portfolio 13% 6% 37% 31% 48% 1% 16% 21% 29% 35% 40% 43% 67% 87% 94% 63% 69% 52% 33% Prime Prime Micro Supply Chain Machinery Partn
Slide 23: Operating and Financial Performance
Operating and Financial Performance Slide 23
Slide 24: Finance | Income Statement
Finance | Income Statement Income Statement (₹ Cr) Q1’FY24 Q4’FY23 Q-o-Q Q1’FY23 Y-o-Y Interest Income 161.5 141.1 14% 93.0 74% Income on Co-Lending / Direct Assignment 43.8 62.4 (30%) 20.5 114% Other Income 13.0 13.7 (5%) 8.3 57% Total Income 218.3 217.2 1% 121.7 79% Interest Expenses 92.7 90.4 3%
Slide 25: Board, Management and Shareholding
Board, Management and Shareholding Slide 25
Slide 26: Independently Supervised: Eminent Board of Directors
Independently Supervised : Eminent Board of Directors Satyananda Mishra – S. Karuppasamy - Karnam Sekar – Hemant Bhargava – Rajeev K. Agarwal - Non-Executive Chairman Independent Director Independent Director Independent Director Independent Director Ex-Chairman, MCX, Ex-CIC, GOI, Ex-Executive Direc
Slide 27: Professionally Managed: 190+ years of cumulative experience
Professionally Managed : 190+ years of cumulative experience Shachindra Nath - Amit Mande - Anuj Pandey - Kishore Lodha - Sunil Lotke – Vice Chairman & Chief Revenue Officer Chief Risk Officer Chief Financial Officer Chief Legal & Compliance Managing Director 20+ Years of Experience 20+ Years of Exp
Slide 28: Institutionally Owned: Majority held by Institutional Investors
Institutionally Owned : Majority held by Institutional Investors Shareholding Pattern 16.49% Other Public shareholders, 22.96% 16.35% Insurance Companies, 5.45% (New Quest acquired by TPG) Foreign Portfolio Investors, 1.90% Body Corporate, 8.26% Promoter, 2.19% 16.35% 10.04% Management to potentiall
Slide 29: Annexure
GRO Annexure Slide 29
Slide 30: The journey of empowering MSME ecosystem
The journey of empowering MSME ecosystem Russia Ukraine War Raised 340 Cr Series of Credit Crises Equity • ILFS Covid – 19 • DHFL Wave 2 • Yes Bank Operational Slow Down Increasing Interest Rate & Global inflation 6,776 Cr Covid – 19 Partnered with CRISIL to Operational Shut down identify and shortl
Slide 31: UGRO Capital – Scaling up through power of Data
UGRO Capital – Scaling up through power of Data Vast customer ecosystem with substantial data footprint, promising unprecedented data-driven learning and tremendous credit penetration opportunities PROCESSED LARGE VOLUME OF DATA SERVED WIDE CUSTOMER BASE SIGNIFICANT HEADROOM TO GROW Exponentially gr
Slide 32: Multi Pronged Distribution Channel with Product Yields and Avg. Ticket Size
Multi Pronged Distribution Channel with Product Yields and Avg. Ticket Size Prime Loan Branches Micro Loan Branches Product Avg. Yield Tenor Avg. Yield Tenor Branch-Led Channel – Catering through 95+ branches Ticket % Ticket % • Prime Loan Branches : 23 branches with origination through intermediate
Slide 33: Sector Focused Approach, Multiple Products and Large Distribution Strength
Sector Focused Approach, Multiple Products and Large Distribution Strength Hospitality Supply Chain 23 Financing Prime Branches Light Engineering Business Loans Secured by Property 75 Auto Components Unsecured Micro Branches Business Chemicals Loans 850+ GRO Partners Our Product Food Processing Offe
Slide 34: Lending as a Service (L-a-a-S)
Lending as a Service (L-a-a-S) Co-Lending is a value accretive model Example of 80:20 Co-Lending Partnership Model Customer ROI of 14.5% Benefits to Partner Benefits to UGRO (assumption) on INR 1 Lakh Institution Loan • Higher ROA & ROE on account of • Risk weight lower in case of Co- - Better lever
Slide 35: Lending as a Service (L-a-a-S) is a highly profitable model
Lending as a Service (L-a-a-S) is a highly profitable model Sample Illustration Assumptions for Calculation Particulars (INR Cr) Normal Scenario Co-lending Model Particulars Ratios On Balance Sheet On Book – 20% Off Book – 80% Total Loan Amount 1,00,000 20,000 80,000 1,00,000 Yield 14.5% Equity Capi
Slide 36: Thank You
Thank You www.ugrocapital.com Slide 36