UGRO Capital Limited submitted additional information regarding its financial results for the quarter ended December 31, 2025, to BSE Limited and National Stock Exchange of India Limited under Regulation 30 of SEBI regulations on February 9, 2026.

Financial Performance Clarification

The company provided detailed clarification following multiple investor queries regarding quarter-on-quarter movement in standalone financial performance. During Q3FY26, Direct Assignment transactions were largely undertaken at Profectus Capital Private Limited, a wholly-owned subsidiary, rather than at the standalone entity level due to more favourable execution economics and pricing.

Quarter-on-Quarter Performance Analysis

On a standalone basis, Profit After Tax for Q3FY26 was ₹637.58 lakh compared to ₹4,331.12 lakh in the previous quarter ended September 30, 2025, reflecting a decline of ₹3,693.54 lakh. This decline is largely attributable to lower gains from Direct Assignment transactions, with net gain on derecognition of financial instruments reducing from ₹10,063.42 lakh to ₹6,617.64 lakh, representing a reduction of ₹3,445.78 lakh.

Strategic Business Operations and Subsidiary Focus

The company emphasized that Direct Assignment transactions at Profectus level were driven by the nature and seasoning of assets held at the subsidiary. Accordingly, the net gains that may have otherwise accrued to the standalone entity were recognized at Profectus level and are reflected in consolidated financial statements.

Investor Advisory and Performance Evaluation

UGRO Capital advised investors and analysts to review and evaluate the company's performance using consolidated financial statements for comparative and analytical purposes. The company clarified that the reduction in standalone PAT does not reflect any deterioration in underlying profitability and is primarily due to execution of Direct Assignment transactions at the subsidiary level.

Asset Quality and Market Position

The company maintains stable asset quality metrics with GNPA at 2.2% and NNPA at 1.4% on total AUM. UGRO continues its positioning as a technology-enabled MSME lender with strong presence across emerging markets through 340+ branches, offering diversified product suite including secured business loans, emerging market lending, embedded finance, and machinery financing.

The clarification document is available on the company's website at www.ugrocapital.com for stakeholder reference and provides detailed insights into the company's financial performance and strategic operations.

UGRO Capital Limited has received a 'CareEdge B+/Stable' rating from CareEdge Global IFSC Limited for its USD 50 million External Commercial Borrowing facility. The rating announcement was made through a regulatory filing dated January 30, 2026, highlighting the company's strong business fundamentals while acknowledging certain operational challenges.

Rating Details and Rationale

The Long-Term Foreign Currency rating reflects UGRO Capital's robust business profile, supported by a substantial and predominantly secured asset base. As of September 30, 2025, the company's Assets Under Management stood at Rs 12,226 crore, with approximately 70% comprising secured products including loan against property and machinery loans.

Business Profile Strengths

UGRO Capital demonstrates strong diversification across multiple dimensions. The company's product suite caters to nine MSME segments, while its geographic diversification remains robust with the top six states accounting for around 65% of AUM. The secured business loan segment accounts for a significant portion of the portfolio, providing stability and reducing credit risk.

The company has delivered exceptional growth, with AUM increasing from approximately Rs 1,300 crore in FY21 to over Rs 12,200 crore by H1FY26, representing a CAGR of nearly 56%. This growth trajectory was further strengthened by the acquisition of Profectus Capital Private Limited, completed on December 08, 2025, at a cost of Rs 1,400 crore.

Asset Quality and Financial Performance

The rating assessment reveals moderate asset quality metrics that partially offset the company's strengths. Key financial indicators as of September 30, 2025, include:

The company's profitability remains modest, primarily due to elevated operating costs at 3.4% on average managed assets for H1FY26 and borrowing costs of approximately 10.3%. These factors have kept the Return on managed assets at 1.0% in H1FY26, compared to 1.2% in FY25.

Strategic Acquisition and Future Outlook

The acquisition of Profectus Capital, which had a loan book of Rs 3,400 crore and net worth of Rs 1,200 crore, is expected to generate synergies through branch rationalization and a more secured product portfolio. Management anticipates benefits from school loans and machinery loans, though the actual impact will be assessed over the next 12-18 months.

Post-acquisition, UGRO's combined AUM stands at approximately Rs 15,500 crore, enhancing diversification with school financing and strengthening prime LAP and machinery finance segments.

Rating Outlook and Sensitivities

The stable outlook reflects CareEdge Global's expectation that UGRO Capital will maintain its current financial and operational profile over the medium term with consistent growth in scale of operations. Upward rating factors include achieving gearing of less than 3x on a sustained basis and RoA exceeding 2% annually. Conversely, downward pressures could emerge if gearing crosses 4x or credit costs exceed 4.5%.

Source: UGRO Capital Limited regulatory filing and CareEdge Global IFSC Limited press release