UGRO Capital Issues ₹1811 Crore in NCDs, Pledges Shares

UGRO Capital Limited has approved the private placement of Non-Convertible Debentures (NCDs) totaling ₹1811 crore. The issuance is divided into two tranches. Series I involves ₹461 crore with a 13.25% coupon, maturing in April 2032. Series II comprises ₹1350 crore at a 9.50% coupon, maturing in April 2027.

The Details of the Issuance

UGRO Capital announced on March 27, 2026, its approval for the allotment of Non-Convertible Debentures (NCDs) for ₹1811 crore via private placement.
Series I includes ₹461 crore in NCDs with a 13.25% coupon rate, due April 5, 2032. Series II consists of ₹1350 crore in NCDs, carrying a 9.50% coupon rate and maturing on April 18, 2027.
To secure these debentures, UGRO Capital will pledge its shares to the Debenture Trustee.

Significance of the Funding

This NCD issuance provides UGRO Capital with a substantial debt capital infusion, boosting its liquidity and financial resources. The funds are intended to support ongoing lending operations and growth initiatives. The pledge of company shares directly secures the debenture holders' investment, a point of interest for existing shareholders.

UGRO Capital's Funding History

UGRO Capital has a history of tapping capital markets to fuel its growth. The company previously raised significant funds through public NCD offerings, including a ₹200 crore issuance in February 2024. Strategic shifts have focused the company on secured lending and embedded finance, aiming to increase recurring income and operational efficiency. The acquisition of Profectus Capital in December 2025 further aimed to diversify its business portfolio.

What This Means for UGRO Capital

• Increased Debt Levels: This new NCD issuance will raise the company's overall debt.
• Support for Operations: The enlarged capital base is expected to back ongoing lending and potential growth.
• Shareholder Security: Pledging equity shares provides security for debenture holders, which equity investors will monitor.
• Funding Diversification: This issuance aligns with the strategy of broadening funding sources beyond traditional bank loans.

Potential Risks and Market Reaction

The company's Capital Adequacy Ratio (CAR) stood at 19.4% as of March 31, 2025, showing a reduced but still adequate buffer above required thresholds.
Like other Non-Banking Financial Companies (NBFCs), UGRO faces risks from interest rate volatility, which can affect net interest margins.
Market reaction can be sensitive to debt-heavy funding. For instance, UGRO Capital shares experienced a decline of up to 4% on March 23, 2026, following earlier announcements of similar NCD fundraising plans.

Competitive Landscape

UGRO Capital operates within a competitive NBFC sector that includes companies like Shriram Finance, Bajaj Finance, IIFL Finance, and AYE Finance, all targeting MSME and retail lending. These competitors frequently use varied funding methods, such as debt issuances and securitization, to meet capital requirements and support asset growth.

Key Financial Metrics

• As of March 31, 2025, UGRO Capital's consolidated Assets Under Management (AUM) were ₹12,003 crore.
• The consolidated Capital Adequacy Ratio (CAR) was 19.4% on March 31, 2025, and 25.4% in H1FY26.

What Investors Are Watching

• NCD Listing: The planned listing of these NCDs on BSE Limited.
• Fund Deployment: How effectively UGRO deploys the new capital into its lending portfolios.
• Asset Quality: Ongoing assessment of the loan book's asset quality and non-performing assets (NPAs).
• Capital Standing: The future trend of its Capital Adequacy Ratio (CAR) and overall leverage.
• Share Pledge Effects: Market reaction and further details concerning the pledge of equity shares.