Rs 150 Crore NCD Private Placement: 9.66 per cent Yield with Monthly Interest
Company approves issuance of secured debentures with monthly payouts.
UGRO Capital Limited’s Investment and Borrowing Committee has approved the issuance of up to 1,00,000 senior, secured, rated, listed, redeemable, and taxable non-convertible debentures (NCDs) on a private placement basis. Each debenture will have a face value of Rs 10,000, aggregating to Rs 100 crore, with an option to retain oversubscription up to Rs 50 crore under a green shoe option. The NCDs will be denominated in Indian Rupees and listed on the BSE.
Key Terms of the NCDs
The NCDs have a tentative tenure of 18 months, with the allotment expected on January 15, 2025, and maturity on July 15, 2026. The coupon rate is estimated at 9.66 per cent per annum, payable monthly. These instruments are secured by a first-ranking exclusive charge, ensuring a minimum security coverage of 110 per cent of the outstanding amount.
Strategic Importance
This NCD issuance aligns with UGRO’s strategy to strengthen its funding base while maintaining a balanced liability structure. The funds raised will likely support the company's lending operations, particularly in its focus sectors such as micro-enterprises, light engineering, and electrical equipment.
Financial Stability
UGRO Capital has demonstrated steady growth, with its assets under management (AUM) crossing Rs 10,000 crore in FY25. The company maintains a healthy asset quality, with gross NPAs at 2.1 per cent and net NPAs at 1.4 per cent. It also emphasizes maintaining a diversified liability mix, with NCDs constituting 28 per cent of its debt as of FY24.
DSIJ offers a service 'Flash News Investment' with recommendations for Profit-making Ideas for You (Weekly) based on research and analysis to help subscribers make healthy profits. If this interests you, then do download the service details pdf here
Future Outlook
With plans to expand its branch network and increase its off-balance sheet portfolio, UGRO aims to achieve an ROA of 4 per cent by FY26. The NCD issuance will play a crucial role in meeting the company’s growth targets and addressing the credit gap for MSMEs.
Conclusion
UGRO Capital’s latest move to issue Rs 150 crore worth of NCDs reflects its commitment to sustainable growth and financial stability. By leveraging technology and focusing on MSME financing, the company is well-positioned to navigate challenges and achieve its long-term objectives.
Disclaimer: The article is for informational purposes only and not investment advice.