Ugro Capital (UGRO): Top 5 Reasons Brokerages Predict a 60% Upside for This NBFC Stock

<ul>
  <li>Ugro Capital's share price has been on an upward trajectory since the start of the financial year 2024-25.</li>
  <li>The stock has rebounded from its 52-week low, showing a significant rise.</li>
  <li>Leading brokerages predict a substantial upside for Ugro Capital shares, citing strong Q4 results and other factors.</li>
</ul>
<p><strong>Discover why Ugro Capital's stock is poised for significant growth, with expert insights and detailed analysis.</strong></p>
<h2><strong>Top triggers for Ugro Capital share price</strong></h2>
<p>Ugro Capital's share price has been gaining momentum, driven by several key factors. Analysts have identified strong Q4 results, strategic acquisitions, capital raises, and a robust growth story as primary drivers. Additionally, a recent rating upgrade by CRISIL has further bolstered investor confidence.</p>
<h3><strong>Strong Q4 results 2024</strong></h3>
<p>Sonal Gandhi, Research Analyst at Centrum, highlighted Ugro Capital's impressive Q4FY24 performance. The company reported an adjusted PAT of ₹396 million, up 70% YoY and 22% QoQ, surpassing estimates. Total income grew 60% YoY and 24% QoQ, driven by higher other income and increased share of co-lending and Direct Assignment. Operating profit saw a 90% YoY increase, reflecting the company's strong financial health.</p>
<h3><strong>Expansion via acquisitions</strong></h3>
<p>Ugro Capital's acquisition of 'MyShubhLife' (MSL), an embedded finance fintech platform, is a strategic move to expand its business. The acquisition is expected to add 200k new retailers, incremental AUM of ₹15 billion, and PAT of ₹1 billion within three years. This move will help Ugro tap into smaller retailers and provide short-term loans with high-interest rates.</p>
<h3><strong>Capital raise to meet the demand for growth capital</strong></h3>
<p>With a recent capital raise of ₹13.3 billion, Ugro Capital is well-positioned for its next growth phase. The capital adequacy and improved RoA are expected to drive better credit ratings and lower borrowing costs. The focus on higher-yielding Micro LAP loans and continued operating leverage will support sustained RoA improvement.</p>
<h3><strong>Strong growth story</strong></h3>
<p>Ugro Capital's financial performance in FY24 underscores its growth potential. The company reported a 49% YoY increase in AUM growth, doubling its ROA and ROE. This robust performance indicates Ugro's capability to deliver consistent returns to shareholders.</p>
<h3><strong>Rating upgrade by CRISIL</strong></h3>
<p>Emkay Global reported that Ugro Capital received a rating upgrade to 'A' by CRISIL towards the end of FY24. This upgrade reflects the company's improved financial stability and growth prospects.</p>
<h2><strong>Ugro Capital share price target</strong></h2>
<p>Sonal Gandhi of Centrum suggests that investors should consider Ugro Capital's share price potential. Despite a slight cut in AUM growth estimates, the company is expected to achieve significant growth in AUM, PPOP, and PAT over FY24-26E. The target price is set at ₹440, with a 'Buy' recommendation.</p>
<h3><strong>Conclusion</strong></h3>
<p>Ugro Capital's strong financial performance, strategic acquisitions, and capital raises position it well for future growth. The rating upgrade by CRISIL further enhances its credibility. Investors can expect substantial returns, making Ugro Capital a compelling stock to consider.</p>