According to the KPMG report, the Non-Banking Financial Companies (NBFC) sector in India has emerged as a vital component of the financial ecosystem, contributing over 25% to the total credit portfolio as of 2024. With approximately 10,000 registered NBFCs, this industry plays a crucial role in enhancing financial inclusion and providing diverse credit solutions across various sectors, including retail and microfinance.
With a market capitalization of Rs 2,491.23 crore, the shares of Ugro Capital Ltd were trading at Rs 268.00 per share, increasing around 3 percent as compared to the previous closing price of Rs 256.05 apiece.
Brokrage Recommendations:-
Incred Capital, one of the well-known brokerages in India, gave a ‘Buy’ call on the NBFC stock with a target price of Rs 350 apiece, indicating a potential upside of 30 percent from Tuesday’s price of Rs 268.00 per share.
Target Rational:-
According to the brokerage, UGRO Capital is a data-tech lending platform that offers financial services to small and micro companies in India. It provides tailored lending solutions to SMEs in eight industries, including healthcare, education, chemicals, food processing, hotels, and others. It also has co-lending agreements with more than ten significant public sector banks and large non-bank financial institutions.
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Moreover, the brokerage expected that UGRO Capital is well-positioned to enter the next phase of its growth. They expect strong AUM growth with a stable margin over two fiscal years.
Financial performance:-
The company’s revenue increased 37%, rising from Rs 213 crore in Q1FY24 to Rs 291 crore in Q1FY25, while net profit zoomed by 20%, growing from Rs 25 crore to Rs 30 crore during the same period, reflecting strong financial performance and continued business growth.
Additionally, the firm’s assets under management (AUM) were up 36 percent at Rs 9,200 crore for the quarter, as against Rs 6,777 crore recorded in the same quarter during the year-ago period.
Future plan & guidance:-
The company’s strategic focus is on achieving sustainable growth while ensuring profitability. By targeting a minimum annual growth of Rs 3,000 crore in Assets Under Management (AUM) and maintaining a 4% Return on Assets (ROA) by FY25, it aims to enhance financial stability.
Moreover, to optimize operational efficiency, the goal is to achieve an operating expense-to-income ratio of 45% within 6-8 quarters. Additionally, the company plans to limit
leverage to a maximum of 4.5 times for the next 2-3 years, ensuring robust financial health while pursuing higher-yielding segments with lower credit costs.
Company Profile:-
Ugro Capital Limited specializes in providing finance to small businesses and tailored lending solutions throughout eight industries. Healthcare, education, chemicals, food processing/fast-moving consumer goods (FMCG), hotels, electrical equipment and components, auto components, and light engineering are among the industries served by the company.
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Written by:- Abhishek Singh
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