Emkay Global Financial's research report on UGRO Capital
Ugro reported a satisfactory performance in Q2FY25, where it delivered a strong performance in terms of highest-ever net disbursement of Rs19.7bn (+34% YoY; +71% QoQ) and AUM reaching Rs101.6bn (+34% YoY; +10% QoQ). The momentum on fund mobilization and co-lending/direct assignment was strong in the quarter, leading to strong growth in Assignment income. Additional write-off in the rundown supply chain finance book led to a surge in credit cost for the quarter, affecting profitability. Overall, the company is on the right track to deliver sustained strong growth with better profitability driven by operating leverage and improvement in funding cost. To reflect Q2FY25 developments, we have adjusted our FY25-27 estimates leading to ~6-10% cut in FY25-27 EPS.
Outlook
We reiterate our BUY rating on the stock with revised Sep-25E TP of Rs360 (earlier Rs390), implying FY26E P/BV of 1.6x.
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