Ugro Capital Limited — Credit Ratings, 27-06-2025: Credit Rating

India Ratings and CRISIL have placed UGRO Capital's bank loans, non-convertible debentures, and subordinated debt on rating watch with positive or developing implications, affirming short-term commercial paper ratings. The rating watch reflects UGRO’s announced acquisition of Profectus Capital and a concurrent capital raise of around Rs 1300 crore via compulsory convertible debentures and rights issue to fund the transaction. This merger will expand UGRO’s AUM to approximately Rs 15000 crore with enhanced product diversification, operational synergies, and a stronger franchise. Despite modest profitability and ongoing portfolio seasoning, comfortable capitalization (net worth ~Rs 205 Cr, gearing 3.4x) and diversified funding sources support its credit profile. The watch signals potential rating upgrade contingent on successful deal closure and realization of operational benefits, likely improving borrowing costs and investor confidence.