UGRO Capital has announced plans to convene a board meeting on January 8 to deliberate on two significant corporate initiatives that could reshape its operational and financial structure.

Key Agenda Items for Board Review

The upcoming board meeting will focus on two primary matters of strategic importance to the company's future operations.

Profectus Capital Subsidiary Amalgamation

The board will review the proposed amalgamation of Profectus Capital, a subsidiary of UGRO Capital. This corporate restructuring initiative represents a significant step in the company's organizational consolidation efforts. The amalgamation process, if approved, could lead to streamlined operations and potentially enhanced operational efficiency across the combined entity.

Commercial Paper Issuance Enhancement

The second major item on the agenda involves discussions around raising the limit for issuing commercial papers. Commercial papers serve as short-term debt instruments that companies use to meet immediate funding requirements. An increase in the issuance limit would provide UGRO Capital with greater financial flexibility and enhanced access to short-term capital markets.

Strategic Implications

These proposed initiatives reflect UGRO Capital's focus on optimizing its corporate structure while simultaneously expanding its funding capabilities. The amalgamation of Profectus Capital could result in operational synergies, while the enhanced commercial paper limits could support the company's working capital requirements and growth initiatives.

The January 8 board meeting will be crucial in determining the company's approach to these strategic decisions, with outcomes potentially influencing UGRO Capital's operational framework and financial positioning in the coming period.

UGRO Capital Limited has received positive credit rating actions from two major rating agencies following the successful completion of its acquisition of Profectus Capital Private Limited (PCPL). Both India Ratings Research Private Limited and CRISIL Ratings Limited have affirmed the company's credit ratings while removing their respective rating watch statuses.

India Ratings Affirms Ratings with Positive Outlook

India Ratings has taken comprehensive rating actions across UGRO Capital's debt instruments, affirming ratings at IND A-/Positive outlook. The agency has removed the Rating Watch with Positive Implications status that was previously maintained on the company's instruments.

CRISIL Reaffirms Ratings at Stable Outlook

CRISIL Ratings Limited has also reaffirmed UGRO Capital's ratings while removing the Rating Watch with Developing Implications status. The agency has assigned a Stable outlook to the company's instruments.

Acquisition Details and Strategic Impact

The rating actions follow UGRO Capital's completion of its acquisition of 100% stake in Profectus Capital Private Limited for an aggregate cash purchase consideration of ₹1,398.60 crores. The acquisition was announced on June 17, 2025, and completed on December 8, 2025, making Profectus a wholly-owned subsidiary of UGRO Capital.

The acquisition significantly enhances UGRO Capital's market position in the MSME lending space. The combined entity will have consolidated assets under management (AUM) estimated to be around ₹15,000 crores, with the merged entity expected to benefit from:

• Enhanced presence in prime loan against property (prime LAP) and machinery finance segments
• Product diversification through addition of school financing portfolio
• Higher proportion of secured lending and on-book portfolio
• Diversification of lender base
• Expected synergies of around ₹120 crores through cost rationalization

Financial Performance and Business Metrics

UGRO Capital has demonstrated strong growth in its franchise, with AUM growing to ₹12,200 crores in H1 FY26 from ₹12,000 crores in FY25 and ₹9,050 crores in FY24. The company operates through 325 branches across 12 Indian states, with 23 prime branches and 302 emerging market branches.

Key financial highlights include:

Rating Rationale and Outlook

Both rating agencies highlighted several key strengths supporting their affirmations:

Strengths:

• Strong growth in franchise with diversified MSME exposure
• Adequate capital buffers with demonstrated capital raising ability
• Significant off-book proportion supporting profitability
• Diversified funding mix and lender base
• Geographic and sectoral diversification across MSME value chain

Areas of Focus:

• Moderate profitability due to elevated operating expenses
• Asset quality seasoning needs to be established
• Integration and realization of synergies from the acquisition

The Positive outlook from India Ratings reflects expectations of continued franchise growth and strengthening market position, while CRISIL's Stable outlook indicates confidence in the company's ability to maintain its credit profile post-acquisition.

Liquidity and Capital Position

UGRO Capital maintains adequate liquidity with total liquid resources of around ₹2,200 crores as of September 2025, comprising unencumbered cash, liquid investments, and unutilized bank lines. This provides sufficient coverage for debt obligations while supporting business growth requirements.

The company has successfully raised ₹910 crores in H1 FY26 through compulsory convertible debentures (₹530 crores) and rights issue (₹380 crores), with the CCD proceeds used to finance the Profectus acquisition. The combined entity is expected to maintain leverage below 4.0x on a steady-state basis.