Ugro Capital reported a 14% decline in net profit to ₹37 crore for the September quarter, driven by higher borrowing costs and increased provisions for potential bad loans. Despite the profit dip, the company aggressively expanded its business, with loan disbursements surging 77% to ₹3,159 crore. Investors are now tracking the upcoming November 20 NCLT hearing for the merger with Profectus Capital, which management expects will stabilize future financial reporting.
Ugro Capital, a non-banking financial company focused on lending to small and medium enterprises, recorded a 14% decline in standalone net profit for the quarter ended September 30, 2026. The company’s net profit fell to ₹37 crore, down from ₹43.3 crore during the same period last year.
Profit Impacted by Rising Costs
While the company’s total income grew, its bottom line faced significant pressure from rising expenses. A key factor was a 91% surge in impairment charges, which climbed to ₹84.7 crore. Impairment charges refer to the money a lender sets aside to cover potential losses from loans that may not be repaid. Additionally, the company’s finance costs—the expense of borrowing capital to fund its lending activities—rose to ₹264.8 crore. These increased costs outpaced income growth, leading to a tightening of profit margins during the quarter.
Lending Grows Despite Margin Challenges
Even as profitability came under pressure, the company continued its aggressive push to grow its loan book. Loan disbursements jumped 77% compared to the previous year, reaching ₹3,159 crore. This rapid expansion in the MSME lending segment suggests that the company is successfully finding demand for its credit products. However, the challenge for the company moving forward will be balancing this volume-led growth with the rising cost of funds and the need to maintain strong asset quality in a competitive lending environment.
Merger Timeline and Next Steps
Ugro Capital is currently in the final stages of its proposed merger with Profectus Capital. The company has announced that the National Company Law Tribunal (NCLT) has scheduled the final hearing for the merger on November 20, 2026. Management has indicated that this consolidation is a strategic priority, as it is expected to change the company’s accounting method for co-lending and direct assignment loans.
By recognizing income over the active duration of loans rather than the full contractual term, the company aims to reduce the volatility in its reported quarterly profits. Following the merger, the company projects a capital adequacy ratio—a measure of its financial buffer to absorb potential losses—of approximately 22%. Investors and market analysts will likely monitor the outcome of the November 20 hearing and the subsequent impact of the merger on the company’s profitability and accounting practices.