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 Limited has completed the allotment of 5,34,088 equity shares following the mandatory conversion of Compulsorily Convertible Debentures (CCDs). The Securities Allotment & Transfer Committee approved this conversion on December 17, 2025, after the 18-month tenure of the CCDs expired as per the original terms of issuance.

CCD Conversion Details

The conversion stems from the company's significant capital raise in June 2024, when UGRO Capital raised Rs. 1,265.00 crore through the issuance of CCDs and Convertible Warrants via preferential allotment. The CCDs allotted on June 18, 2024, carried an 18-month tenure, which expired in December 2025, triggering the mandatory conversion.

Updated Share Capital Structure

Following this latest allotment, UGRO Capital's equity structure has been significantly updated:

The newly allotted equity shares rank pari-passu with existing equity shares in all respects, providing equal rights and privileges to the holders.

Warrant Lapse and Clarification

Simultaneously, 2,04,88,631 Convertible Warrants issued on June 18, 2024, have lapsed as the warrant holders did not exercise their conversion rights within the 18-month tenure. Additionally, the company clarified a typographical error in its earlier disclosure dated December 5, 2025, regarding warrant lapses from June 6, 2024. The correct number of warrants that lapsed was 1,74,54,450, not 1,76,34,374 as previously mentioned.

Commercial Paper Issuance

Earlier in the year, UGRO Capital had also raised Rs. 20.00 crore through Commercial Papers with a 182-day tenure. These CPs were issued at Rs. 4,78,069 per security with a face value of Rs. 5.00 lakh each, generating net proceeds of Rs. 19.12 crore.

These strategic financial moves demonstrate UGRO Capital's continued efforts to optimize its capital structure through various instruments, supporting its operations in the financial services sector.