This smallcap NBFC stock rose 5% ahead of Board meeting to raise funds

Ugro Capital shares surge: Shares of Ugro Capital were buzzing in trade on Monday, September 23, 2024. Ugro Capital scrip soared up to 5.44 per cent to hit an intraday high of Rs 270 per share. 

The shares of Ugro Capital rose ahead of the company's scheduled board meet on September 24 to consider fund raising.

Notably, the board meeting was previously scheduled to be held today, September 23, 2024, to consider raising funds via Non-Convertible Debentures (NCDs) on a private placement basis. The company, however, did not disclose the amount of fundraising. 

NCDs are a type of debt instrument used by companies and institutions to raise funds from the public or institutional investors.

 

In an exchange filing, Ugro Capital said, “In furtherance to our previous intimations submitted on September 17, 2024 and September 18, 2024 regarding the meeting of Investment and Borrowing Committee of the Board of Directors (“Committee”) scheduled to be held on Monday, September 23, 2024, to consider and approve raising of funds by way of issuance of Non-Convertible Debentures through private placement basis and through public issue, we hereby notify that the meeting has been postponed to Tuesday, September 24, 2024 for the same purpose due to inevitable reasons.  

A shot in the arm

Meanwhile, domestic brokerage firm InCred Equities has initiated coverage with an ‘Add’ rating for a target price of Rs 250 as it believes Ugro Capital is well positioned to enter the next phase of its growth with a rising market share in the growing landscape of MSME lending.

“We initiate coverage on the stock with an ‘Add’ rating, valuing it at about 1.5x FY26F price-to-book value (P/BV) to arrive at a target price of Rs 350. Slower growth and weak asset quality are the key downside risks to our investment thesis,” the brokerage said in a note.  

Furthermore, analysts at InCred expect a strong asset under management (AUM) growth (+34.2 per cent compound annual growth rate (CAGR) over FY24-27F) led by both on-and off-balance sheet growth resulting in improving margins (+160 basis points) along with operating leverage kicking in, which will shore up return ratios to approximately 4 per cent return on assets (RoA) and about 14 per cent return on equity (RoE), adjusting for equity infusion of Rs 12,70 crore, by FY27F. 

Ugro Capital is a data-driven lending platform dedicated to fulfilling the credit needs of small and micro enterprises (MSMEs) across India. 

The company’s mission is to empower these businesses by offering tailored loan solutions that cater to their unique requirements. The company provides a diverse range of products, including supply chain financing, unsecured business loans, machinery loans, and loans specifically for micro enterprises.

Utilising a technology-enabled, data-centric approach, Ugro Capital ensures that each loan solution is customised to fit the specific needs of our clients. The company focuses on eight key sectors including healthcare, education, chemicals, food processing, and hospitality, among others. It has a network of over 100 branches across India.

The market capitalisation of Ugro Capital is Rs 2,465.20 crore, according to BSE. The company falls under the SmallCap category. 

At 11:38 AM, shares of Ugro Capital were trading 3.57 per cent higher at Rs 265.20 per share. In comparison, BSE Sensex was trading 0.13 per cent at 84,650.26 levels.