Ugro Capitals rise 3% after company clarifies on RBI circular on credit risk

Ugro Capital says its loan books fall under the Priority Sector Lending category and hence it would have minimal impact by the RBI norms

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Shares of Ugro Capitals gained 3 percent on November 22. The share price rose after the company issued clarifications on how the RBI circular on increased credit risk would not affect the company’s loan books.
At 2:53 pm, the stock was trading at Rs 272.1, up by 3.74 percent.

According to a regulatory filing done by Ugro Capital, the company’s debt-equity ratio stood at 2.8x while its capital adequacy was at 24.8 percent.
According to the company, its consumer and personal loan customers would fall under the Priority Sector Lending (“PSL”) loan book.

Since the customer base has Udyam registrations, the company would not have any additional risk weightage. Ugro added the RBI circular’s increased risk weightage for capital adequacy ratio, Return on Equity and Return on Asset would be none.

The company also said since the company’s asset under management comes under PSL classification, it shouldn’t have an extra impact on material cost while borrowing from banks.

In its September quarterly results, the company’s revenue went up 62.23% YoY to Rs 244.57 crore. Its net profit increased to Rs 28.89 crore from Rs Rs. 5.27 crore in the previous year. Shares of Ugro Capital have surged nearly 80 percent this year.

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