Ugro Capital Q1 Results: Net profit rises 99% YoY to ₹67.9 crore

Ugro Capital Limited reported a net profit of ₹67.9 crore for the quarter ended June 30, 2026, marking a 99% year-on-year increase from ₹34.1 crore in Q1FY26. The surge in profitability was primarily driven by a strategic reduction in operating expenses and a shift in portfolio mix toward higher-yield emerging market loans and embedded merchant finance, rather than upfront income from direct assignment or co-lending arrangements.

The company submitted its investor presentation to the Bombay Stock Exchange and National Stock Exchange of India Limited on August 4, 2026, pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The filing highlights the progress of its strategic realignment, which aims to transition the business model from a volatile, upfront-income structure to a self-sustained, annuity-led returns model targeting a steady-state return on assets (ROA) of 3.0–3.5%.

Financial Performance

Total income for Q1FY27 stood at ₹534.7 crore, down 15% quarter-on-quarter from ₹631.7 crore in Q4FY26 but up 27% year-on-year from ₹421.8 crore. This decline in quarterly income was largely due to a 52% drop in income from co-lending and direct assignment, which fell from ₹154.6 crore to ₹74.9 crore. However, this reduction was more than offset by a 42% decrease in total operating expenses, which fell from ₹205.3 crore to ₹118.5 crore. Consequently, profit before tax (PBT) remained relatively stable at ₹61.5 crore, compared to ₹71.2 crore in the previous quarter, while rising 28% year-on-year.

Metric	Q1FY27 (₹ Cr)	Q4FY26 (₹ Cr)	QoQ Change	Q1FY26 (₹ Cr)	YoY Change
Interest Income	363.0	415.2	(13%)	304.2	19%
Co-Lending / DA Income	74.9	154.6	(52%)	90.8	(18%)
Total Income	534.7	631.7	(15%)	421.8	27%
Total Opex	118.5	205.3	(42%)	120.6	(2%)
PBT	61.5	71.2	(14%)	48.2	28%
PAT	67.9	51.1	33%	34.1	99%

Portfolio Realignment and AUM Growth

The company’s asset under management (AUM) in the emerging market segment increased by 9% quarter-on-quarter to ₹3,896 crore as of June 2026, up from ₹3,581 crore in March 2026. Simultaneously, the AUM for its GROx segment (rebranded from “MyShubhLife”) grew significantly by 32% quarter-on-quarter to ₹3,003 crore. The focus products mix, comprising Emerging Market LAP and Embedded Merchant Finance, increased from 32% as of December 2025 to 46% as of June 2026, ahead of the target to reach 85% of AUM by FY29.

The Prime Intermediated portfolio, which includes business loans, machinery, and prime LAP, saw a rundown of 14% quarter-on-quarter, bringing its current mix to 54%. This aligns with the management’s commitment to reduce this lower-yield segment at a pace of 15–20% per annum. The blended branch productivity improved to ₹0.62 crore in Q1FY27, up from ₹0.48 crore in FY26.

What the Numbers Show

The divergence between the sharp decline in co-lending income and the stable PBT underscores the effectiveness of Ugro Capital’s cost-cutting measures. By reducing employee costs by 40% and other expenses by 29%, the company has structurally lowered its opex burden. This operational efficiency allowed the firm to maintain profitability despite shedding high-volume, low-margin intermediated business. The current ROA of 2.8% and ROE of 9.2% indicate that the company is on track to achieve its steady-state ROA target of 3.0–3.5% by FY29, transitioning away from reliance on non-recurring upfront income.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
-0.55%	+1.51%	-0.75%	-37.72%	-43.65%	-13.45%

Ugro Capital reported a 78% year-on-year surge in standalone net profit to ₹607 million for Q1FY27, driven by the rapid scaling of its embedded merchant finance platform, GROx. The non-banking financial company (NBFC) recorded revenue from operations of ₹4.2 billion, up from ₹4.1 billion in the corresponding period last year. This performance marks the first full quarter of execution following the strategic realignment announced in February 2026, which shifted focus toward higher-yielding, scalable lending verticals.

GROx Drives Disbursement Growth

The technology-led embedded merchant finance platform, GROx (formerly MyShubhLife), emerged as the primary growth engine, disbursing ₹1,853 crore in the quarter alone. With over 60,000 loans disbursed monthly, GROx’s asset under management (AUM) grew 32% quarter-on-quarter to ₹3,003 crore as of June 30, 2026. The portfolio maintains strong asset quality with a gross non-performing asset (GNPA) ratio of 2.1% and a yield of approximately 26%. Across the company, total net disbursements rose 59% year-on-year to ₹2,551 crore.

Metric:	Q1FY27	Change
GROx Disbursements:	₹1,853 crore	N/A
GROx AUM:	₹3,003 crore	QoQ ↑ 32%
Total Net Disbursements:	₹2,551 crore	YoY ↑ 59%

Emerging Market Network Stabilizes

Ugro Capital completed the build-out of its Emerging Market branch network, now comprising 317 branches across 13 states supported by more than 2,500 employees. No further incremental branch investments are planned, with future growth expected from improved productivity. Branch productivity is projected to rise from ₹0.62 crore in Q1FY27 to ₹0.80–0.85 crore as the network matures. The Emerging Market business disbursed ₹592 crore, taking its AUM to ₹3,896 crore, up 9% quarter-on-quarter, with a GNPA of 2.1%.

Asset Quality and Profitability

Asset quality strengthened sequentially, with the Gross Stage 3 ratio declining to 2.75% from 3.66%, and the Net Stage 3 ratio improving to 1.71% from 2.24%. Overall GNPA remained stable at 2.6%. Profit Before Tax (PBT) increased 28% year-on-year to ₹61.5 crore. Return on Assets (ROA) improved to 2.8% from 2.1% in Q4FY26, while Return on Equity (ROE) rose to 9.2% from 7.1%. The company maintains a robust balance sheet with a Capital to Risk-Weighted Assets Ratio (CRAR) of 21.0% and cash reserves of ₹1,864 crore.

Strategic Realignment Progress

The company has fully achieved its planned ₹220 crore annualised cost optimisation, with quarterly operating expenses falling 42% to ₹118.5 crore. The lower-yielding Prime lending portfolio reduced by 14% during the quarter. Together, Emerging Market LAP and GROx now constitute 46% of the total AUM mix, up from 32% in December 2025, moving toward an 85% target by FY29. Ugro Capital expects no requirement for additional equity through FY29, aiming for a steady-state ROA of 3.0–3.5% by FY29.

What the Numbers Show

The divergence between stable total AUM (up 24% YoY to ₹15,013 crore) and surging profitability highlights the success of the portfolio mix shift. While overall AUM growth is moderate, the transition from lower-yield Prime loans to higher-yield GROx and Emerging Market loans has expanded margins significantly. The 42% drop in operating expenses alongside a 28% rise in PBT demonstrates that the cost optimization measures are directly translating into bottom-line gains, validating the shift toward an annuity-led earnings model.