Ugro Capital Limited · NSE:UGROCAP
Ugro Capital — Q2 FY24 Earnings Presentation
31 slides from Ugro Capital's earnings presentation, Oct 26, 2023
Slide 1: UGRO Capital Limited Q2'FY24
UGRO Capital Limited Q2’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: Performance Highlights for Q2'FY24 and H1'FY24
Performance Highlights for Q2’FY24 and H1’FY24 Q2FY23 Q2FY24 H1’FY23 H1’FY24 AUM (INR Cr) 4,375 7,592 74% 4,375 7,592 74% Annualized EPS on current rate Net Disbursement (INR Cr)* 1,100 1,476 34% 2,017 2,760 37% INR 12.46 per share for H1’FY24 Off-book AUM 29% 45% 55% 29% 45% 55% Pre-Tax Profit (INR
Slide 4: Business Metrices in line with long term goal
Business Metrices in line with long term goal Credit Cost has been stable 1.4% 1.3% 1.4% 25 21 9 Increasing Off Book Aum Mix Cost To Income Ratio decreasing Y-o-Y Q2'FY23 Q1'FY24 Q2'FY24 Credit Cost Credit Cost/ Avg Total AUM 65% 55% 56% 43% 45% 83 69 56 21% 3 Q2'FY23 Q1'FY24 Q2'FY24 2 ~<2% 4 Q2'FY2
Slide 5: 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 Total MSME Credit gap is Rs 85 trn Credit Gap of our customer segment constitutes 95% FY17 FY22 Medium Enterprise No. of
Slide 6: Of our addressable market, we serve a diverse set of customers
Of our addressable market, we serve a diverse set of customers Prime: Metro & Ecosystem (SCF & Micro: Tier 3-6 Partnership & Tier 1/2 Direct Digital Machinery) Branches Alliances Branches Collateral: Prime Collateral: Collateral: Prime Prime Collateral: Collateral: Standard Standard Collateral: FLDG
Slide 7: Through our multi-pronged distribution channels
Through our multi-pronged distribution channels Prime Loan Branches Micro Loan Branches Branch-Led Channel – Catering through 95+ branches Product Avg. Yield Tenor Avg. Yield Tenor • Prime Loan Branches : 23 branches with origination through intermediated Ticket % Ticket % channel Secured 70L 13.8%
Slide 8: This has led to strong Net Loan Origination
This has led to strong Net Loan Origination Amount in INR Cr Net loans originated increased to INR 1,476 Cr in Q2’FY24 from INR 1,459 Cr in Q1’FY24 ( +15%) and INR 1,100 Cr in Q2’FY23 (+34%). 790 1,054 963 1,359 1,653 1,874 2,314 2,036 2,506 Gross Loans Originated 34% 15% 1,476 1,459 193 1,279 209 1
Slide 9: And strong AUM
And strong AUM Amount in INR Cr AUM increased to INR 7,592 Cr as on Sep’23 from INR 6,794 Cr as on Jun’23 (+12%) and INR 4,375 Cr as on Sep’22 ( +74%). 74% 12% 7,592 6,777 849 11% 6,081 750 893 12% 715 798 5,095 670 9% 701 585 636 4,375 746 8% 567 548 3,656 718 16% 564 472 465 458 2,970 620 11% 2,38
Slide 10: 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 11: 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 22 – Jun 23) 3.8% 3.4% 9% 1% 2.7% 6% A 2.0% B 1.4% GRO Score A & B C 23% ~84% D 0.9% 0.8% 0.7% 61% E A B C D,E Disbu
Slide 12: 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 11% coverage * 6% 29% 16% 5% 17% 12% 2% 9% 7% 9% 12% 6% 8% 15% 9% 4% 27% 12% 23% 9% Guaranteed by CGTMSE 6% Prime - Secured Loans Prim
Slide 13: Collection Efficiencies, Portfolio provisioning (1/2)
Collection Efficiencies, Portfolio provisioning (1/2) Current Month and Overall Collection Efficiency remains robust ECL Data (Sep’23) Current Month Collection (excluding overdue) / Current Month Demand (In Cr) Loan Exposure Loan Exposure (%) Total Collections* (including overdue) / Current Month De
Slide 14: 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% 95% 95% 49% 48% 49% 38% 32% Sep'22 Dec'22 Mar'23 June'23 Sep'23 Sep'22 Dec'22 Mar'23 Jun'23 Sep'23 Restructured Loans (standard portfolio) 1.9% 1.5% 1.1% 0.8% 0
Slide 15: 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 16: 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 (Sep’23) 2,164 2,380 636 670 893 834 On Book Portfolio Off Book Portfolio 9% 4% 50% 45% 38% 16% 21% 29% 35% 40% 43% 45% 68% 91% 96% 50% 55% 62% 32% Prime Prime Micro Supply Chain Machinery Partn
Slide 17: 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 60 2%4% 3,798 Count of Lenders 3,342 21% 3,149 2,725 2,885 Total Debt INR 10.53% 10.58% 10.66% 10.61% 3,798 Cr 10.48% 73% Term Loan NCD Secur
Slide 18: Summarizing our performance highlights for H1'FY24
Summarizing our performance highlights for H1’FY24 01 Asset 02 03 Asset 04 Liability & Profitability Growth Quality Co - lending AUM Net Total Income GNPA Borrowings As on Sep’23 : 7,592 Cr H1’FY24 : 273.9 Cr As on Sep’23 : 1.9% As on Sep’23 : 3,798 Cr (+74% Y-o-Y) (+76% Y-o-Y) (+20 bps Y-o-Y) (60+
Slide 19: Finance | Income Statement
Finance | Income Statement Income Statement (₹ Cr) Q2FY23 Q2FY24 Y-o-Y Q1FY24 Q-o-Q Interest Income 115.7 171.9 49% 161.5 6% Income on Co-Lending / Direct Assignment 28.4 64.8 129% 43.8 48% Other Income 11.2 17.0 51% 13.0 30% Total Income 155.3 253.6 63% 218.3 16% Interest Expenses 68.5 105.4 54% 92
Slide 20: Finance | Income Statement & ROA Tree
Finance | Income Statement & ROA Tree Income Statement (₹ Cr) H1Y23 H1FY24 Y-o-Y FY23 ROA Tree H1Y23 H1FY24 Interest Income 208.7 333.4 60% 482.9 As a % of Gross On Book AUM Income on Co-Lending / Direct Assignment 48.8 108.6 123% 154.1 Total Income 19.4% 22.3% Other Income 19.5 30.0 54% 46.8 Intere
Slide 21: Finance | Balance Sheet
Finance | Balance Sheet Balance Sheet (₹ Cr) Mar-23 Sep-23 Balance Sheet (₹ Cr) Mar-23 Sep-23 Assets Liabilities Cash and Bank Balance 212 548 Trade payables 14 3 Loans 3,806 4,458 Debt securities 1,144 1,036 Investments 60 59 Borrowings (other than debt securities) 2,005 2,762 Other financial asset
Slide 22: 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% 17.4% 63.9% 10.66% 10.61% 62.9% 55.9% 55.0% 55.9% 10.48% 10.53% 10.58% 16.1% 16.3% 16.2% 83 16.0% 105 69 74 69 15.7%
Slide 23: Board, Management and Shareholding
Board, Management and Shareholding Slide 23
Slide 24: 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 25: 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 & Managing Chief Revenue Officer Chief Risk Officer Chief Financial Officer Chief Legal & Compliance Director 20+ Years of Experience 20+ Years of Exp
Slide 26: Institutionally Owned : Majority held by Institutional Investors
Institutionally Owned : Majority held by Institutional Investors Shareholding Pattern 16.47% Other Public shareholders, 26.49% 16.34% Insurance Companies, 4.71% (New Quest acquired by TPG) Foreign Portfolio Investors, 2.72% Body Corporate, 8.24% Promoter, 2.24% 16.34% 6.44% Slide 26
Slide 27: Annexure
GRO Annexure Slide 27
Slide 28: 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 81 Auto Components Unsecured Micro Branches Business Chemicals Loans 500+ GRO Partners Our Product Food Processing Offe
Slide 29: 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 30: 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 31: Thank You
Thank You www.ugrocapital.com Slide 31