U GRO CAPITAL Approves ₹205 Crore NCD Issuance to Bolster Capital

U GRO CAPITAL is set to raise up to ₹205 crore by issuing Non-Convertible Debentures (NCDs) through a private placement. The company's Investment and Borrowing Committee greenlit the move, which is designed to boost its capital base for expanding its MSME lending operations. A key aspect of the issuance includes subordinated debt carrying a higher interest rate of 13.25%, which will increase the company's cost of funds.

NCD Issuance Details

On March 21, 2026, U GRO CAPITAL's Investment and Borrowing Committee sanctioned the NCD issuance. The issuance includes two types of NCDs: Series 1 offers Senior, Secured NCDs with a 12-month, 22-day tenure at 9.50% interest, paid monthly. Series 2 consists of Unsecured, Subordinated NCDs with a tenure of up to 72 months, carrying a higher 13.25% interest rate, paid semi-annually.

While the total issue capacity for these series is up to ₹1,550 crore and ₹500 crore respectively, the current approval limits fundraising to ₹205 crore. This indicates only a portion of the potential capacity will be utilized in this tranche. Tentative allotment is planned for March 27, 2026, with maturities set for April 18, 2027, for Series 1 and March 27, 2032, for Series 2.

Boosting Lending Capacity

This fundraising is crucial for U GRO CAPITAL. It will strengthen the company's financial position, providing essential resources to drive growth in the competitive MSME lending sector. The NCD issuance will affect the company's debt-to-equity ratio and financial leverage, part of its strategy to manage its capital structure.

Context for the Fundraising

U GRO CAPITAL, a technology-driven non-banking financial company (NBFC) focused on MSME lending, has consistently managed its capital. Most recently, on March 18, 2026, the company allotted ₹45 crore worth of NCDs via private placement. In February 2026, U GRO CAPITAL announced a strategic business realignment, focusing on emerging market secured lending and embedded merchant finance, alongside targeting significant cost savings. The company also recently acquired Profectus Capital Private Limited for ₹1,398.60 crore, aiming to enhance its standing in the MSME lending sector.

Key Changes Ahead

• U GRO CAPITAL's capital base will grow, enhancing its lending capacity.
• Funding is diversified through debt, reducing reliance on equity.
• Debt-to-equity ratio and financial leverage will be adjusted.
• The company can pursue growth and new lending opportunities more aggressively.

Potential Risks

• Higher interest costs: The 13.25% rate on subordinated debt will increase the company's overall cost of funds.
• Successful uptake: Investors will watch if the ₹205 crore is fully subscribed, given the larger potential capacity.
• Debt servicing: Timely payments of interest and principal are essential for investor confidence.

Industry Comparison

Major NBFCs such as Shriram Finance, Cholamandalam Investment and Finance, Aditya Birla Capital, and SMFG India Credit also frequently use NCDs to fund their operations. These peers often issue secured NCDs with coupon rates typically ranging from 7% to over 9%, with tenors varying significantly, often extending up to 10 years or more, similar to the maturities planned by U GRO CAPITAL.

Financial Snapshot

As of December 2025, U GRO Capital managed assets worth approximately ₹15,454 crore. For the third quarter of fiscal year 2026 (ending December 2025), net profit was ₹46.27 crore. In FY25, net profit reached ₹143.93 crore, with operating revenue at ₹1,395.90 crore.

What to Watch For Next

• Details on final investor commitments and allocation of the ₹205 crore across the NCD series.
• The finalized allotment date and specific investor terms.
• How the new capital is used to grow AUM and profitability.
• Updates on strategic realignments and cost-saving plans.