NBFC Stock in Focus After Reporting 57% YoY Increase in Revenue

Synopsis: shares of this NBCFC gained 6 percent after FY26 results showed 43 percent revenue growth and 21 percent profit rise, with FY29 strategy focused on high-yield shift and stronger returns.

The share of this company, which  offers secured loans (property), machinery loans, supply chain financing, and unsecured loans to MSME and  small businesses gained investro traction after posting strong Q4 results.

With a market capitalization of Rs 1,750 crore, Ugro Capital Ltd’s shares on Tuesday made a day high of Rs 119.01 per share, up 6.3 percent from its previous day’s close of Rs 111.93 per share. The share of the company gave a negative return of 41 percent over the year.

Results Highlights

QoQ View: The  Interest income rose 26.4 percent in Q4 FY26 to Rs 415.2 crore from Rs 328.4 crore in Q3 FY26. Pre-provisioning operating profit increased 31 percent in Q4 FY26 to Rs 142.8 crore from Rs 108.8 crore in Q3 FY26. Profit after tax grew 10 percent in Q4 FY26 to Rs 51.1 crore from Rs 46.3 crore in Q3 FY26.

YoY View: On a YoY basis, interest income rose 57 percent in Q4 FY26 to Rs 415.2 crore from Rs 264.4 crore in Q4 FY25, reflecting strong growth momentum. Pre-provisioning operating profit increased 28 percent in Q4 FY26 to Rs 142.8 crore from Rs 111.5 crore in Q4 FY25, supported by improved operating performance. Profit after tax grew 26 percent in Q4 FY26 to Rs 51.1 crore from Rs 40.5 crore in Q4 FY25. The Q3 FY26 and Q4 FY26 are consolidated, while Q4 FY25 is standalone. Q3 FY26 includes Profectus from Dec 8, 2025, so figures are not fully comparable.

Fiscal Year comparison: The interest income rose 43 percent in FY26 to Rs 1,370.2 crore from Rs 958.8 crore in FY25. Pre-provisioning operating profit increased 20 percent in FY26 to Rs 452.9 crore from Rs 376.2 crore in FY25, reflecting steady operating growth. Profit after tax grew 21 percent in FY26 to Rs 174.8 crore from Rs 143.9 crore in FY25. 

Business Performance

• Scale & Disbursements: AUM rose 28 percent YoY to Rs 15,334 crore, though it declined 1 percent QoQ. Net disbursements fell 12 percent YoY and 4 percent QoQ to Rs 2,137 crore, mainly due to the strategic halt in Prime Intermediated lending as part of portfolio realignment.
• Asset quality and yield trends: GNPA inched up to 2.5 percent from 2.2 percent in Dec 2025, reflecting a marginal change . Portfolio yield improved to 17.5 percent, up 18 bps YoY, supported by a shift toward EM and embedded merchant finance. Cost of borrowings also improved to 10.16 percent, down 45 bps YoY.
• Operational expansion and network: The branch network expanded to 317 EM branches from 212 in Mar 2025, marking strong build-out progress. Management now indicates the expansion phase is largely complete, with focus shifting toward productivity and efficient utilisation of the existing network.

FY29 Strategy: High-Yield Shift, Cost Cuts, Strong Capital & Rising Returns

• Portfolio shift toward high-yield business (FY29 target): The company’s key FY29 goal is to increase exposure to EM LAP and embedded merchant finance to 85 percent of AUM from 38 percent currently. The mix shift is already visible, rising from 32 percent in Dec 2025 to 38 percent in Mar 2026, marking the fastest quarterly change so far.
• Cost rationalisation and operating efficiency: A major part of the plan is cost reduction, with annualised savings of Rs 200 crore to Rs 220 crore expected from sales, credit, and branch optimisation. This is aimed at improving profitability while supporting the transition to a leaner operating model.
• Capital discipline and balance sheet strength: The company has committed to no incremental equity dilution for three years, supported by stronger capital metrics. CAR improved to 21.2 percent in Mar 2026 from 20.8 percent in Dec 2025, with net worth at Rs 2,906 crore and leverage at 3.7x.
• Return profile and annuity-led model transition: The business is shifting toward a steadier annuity-based ROA model away from upfront income sources. ROA stood at 2.1 percent in Q4 FY26 with ROE at 7.1 percent, moving toward a long-term FY29 target of 3.0 percent to 3.5 percent ROA.

About the Company

UGRO Capital Limited is a listed DataTech Non-Banking Finance Company (NBFC) in India specializing in MSME and small business financing. Founded in 2018 (formerly Chokhani Securities), it uses AI/ML data analytics and co-lending with banks to provide tailored loans.

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