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.

UGRO Capital has received formal approval from its Investment and Borrowing Committee for the issuance of non-convertible debentures, following the committee meeting held on December 17, 2025. The finance company's structured debt offering represents a strategic capital mobilization initiative designed to support business expansion and operational requirements.

Committee Approval Details

The Investment and Borrowing Committee meeting, which commenced at 3:00 p.m. and concluded at 3:40 p.m., approved the comprehensive NCD issuance plan:

NCD Series Structure

The approved NCD issue comprises multiple series with varying tenures and features, providing flexibility for different investor preferences:

Investment Terms and Features

The NCDs will be denominated in Indian Rupees and issued in dematerialized form. Interest payments are structured on a quarterly basis, with redemption scheduled at maturity dates. The instruments will be listed on BSE Limited, providing liquidity options for investors.

Security arrangements vary across series, with some offering secured options through assignment of rights to receive sale consideration and pledge of investments, while others remain unsecured. The security cover for secured debentures is maintained at 1.1x for enforceable properties.

Strategic Capital Raising

This formal committee approval marks a significant step in UGRO Capital's debt financing strategy. The structured approach with multiple series and flexible oversubscription options demonstrates the company's systematic planning for capital requirements while accommodating diverse investor preferences in the debt market.