10.4% U Gro Capital NCD issue of April 2022 – Review

U Gro Capital NCD issue of April 2022 - Interest Rates, Credit Rating and ReviewU Gro Capital NCD – April 2022 – Issue Details, Interest Rates and Review

U Gro Capital is coming up with secured, Senior, Listed and redeemable NCD bonds now. These bonds would open for subscription on 7th April, 2022. U Gro Capital is the systemically important NBFC company in India. The NCD interest rates for U Gro Capital NCD are up to 10.4% and yield up to 10.9%. These NCDs are offered for 18 months to 36 month tenure. Interest is paid either monthly or quarterly. Should you invest in U Gro Capital NCD issue of April, 2022? What are the risk factors one should consider before investing in U Gro NCD 2022?

Also Read: 9.7% Edelweiss Housing Finance NCD – Is it safe to invest?

About U Gro Capital Limited

Company is a non-deposit taking systemically important NBFC registered with the RBI.

U Gro Capital’s mission is to provide access to financing to the underserved MSME sector, which is critical to Indian economic growth and employment creation, and yet suffers from a chronic lack of affordable, efficient and sustainable credit availability. MSMEs represent the most important organic method by which the country’s impoverished can come out of the so-called ‘Poverty Trap’. Despite the challenges faced during the pandemic year, the company has received various recognitions and awards including,

(i) featuring in the Top 5 Digital / Fintech Lending Companies for MSMEs by BW Disrupt & IBS Intelligence

(ii) ET Best BFSI Brand of the year award for FinTech Category

(iii) Best MSME Lending Company by World Leadership Congress and Awards

(iv) Quick Loan Approval Award and Best Lending Tech of the year Award by National Award for Excellence in Financial Services Marketing and few others.

U Gro Capital NCD issue – April-2022

U Gro Capital NCD opens on Thursday, 7th April, 2022 and closes on Friday, 6th May, 2022.

NCD’s are available in the 3 series. The tenures for these NCDs are for 18 months, 27 months and 36 months.

Coupon interest rates for all categories of investors are between 10% to 10.4%. Yield on these NCD bonds works out up to 10.9%.

These are senior and secured NCDs.

Interest is payable monthly or quarterly depending on the option chosen by the NCD investor.

U Gro Capital NCD Price per bond is Rs 1,000.

Minimum investment is for the 10 bonds. Means, you need to invest for a minimum of Rs 10,000. Beyond this you can invest in multiples of 1 bond.

These bonds would be listed on BSE within 6 working days from the issue closure date and are somewhat liquid investments. However, U Gro Capital NCD Price can fluctuate depending on the demand on that particular day.

These are allotted on first come first serve basis. Hence the issue can be closed before this date if it is oversubscribed before the closure date.

NRI’s cannot apply to this NCD subscription.

U Gro Capital NCD base issue size is Rs 50 Crores with an option to retain over subscription up to Rs 50 Crores totaling to Rs 100 Crores.

Sundae Capital Advisors, Tipsons Consultancy Services and Trust Investment Advisers are the lead manager for the issue.

U Gro Capital NCD Interest Rates – April-2022 Issue

Coupon Interest Rate and Yield - U Gro Capital NCD - April 2022 issue

What are the credit ratings for these NCDs?

U Gro Capital NCD rating is assigned as ACUITE A+ (Outlook: Stable) by Acuite Ratings and Research. Instruments with this rating are considered to have an adequate safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.

How is the company doing in terms of profits?

Its profits are as below:

FY2019 – Rs 3.9 Crores

FY2020 – Rs 19.5 Crores

FY2021 – Rs 28.7 Crores

Why to invest in these NCDs?

1) U Gro Capital NCD’s offer attractive interest rates where investors can get interest up to 10.4% per annum and yield up to 10.9%.

2) U Gro Capital margins are improving year on year. This means that company has ability to pay interest payment on time to its NCD holders without any delay.

3) It issues senior and secured NCDs. These NCDs are safe compared to unsecured NCDs. In case company gets wind-up/shut down for some reason, secured NCD investors would get preference in repayment of capital along with interest as those backed up by assets of the company. Hence it is safe to invest in such secured NCD options.

Why not to invest in these NCDs?

1) The impact of Covid-19 pandemic on business is uncertain, cannot be predicted and can affect them in future too.

2) Company Directors and Promoters are subject to certain legal proceedings and any adverse decision in such proceedings can affect the business.

3) Company financial performance is particularly vulnerable to interest rate volatility.

4) High level of customer defaults or delays in repayment of loans could adversely affect the business.

5) Refer NCD prospectus for complete risk factors.

How to invest in U Gro Capital NCD Online?

This issue is available in only in demat form. You can apply online or through any of the broker website where you are maintaining a demat account. Application forms can be downloaded on the lead manager web site. For more information on this you can refer prospectus.

How safe is U Gro Capital NCD?

These NCD bonds are rated as A+ by Accuite. Such credit rating carry low credit risk.

You may like: Muthoot Finance Apr-2022 NCD offers 8% interest rate

Should you invest in U Gro Capital NCD?

U Gro Capital NCD of April-2022 issue offers very high interest rates up to 10.4% and yield up to 10.9%. These NCDs are rated as A+ by Accuite Ratings and research which are considered as good (while AAA ratings bonds could have been better). However, these credit ratings can change in future without any advance intimation. Since these are senior and secured NCDs, these are a little safer. Bank FDs or debt funds are providing low returns these days. The issue size is small and can get oversubscribed fast. High risk investors who are okay to take risks indicated above can invest in these NCDs.

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4 comments

  • satish

    if u have a demat account ;
    internet banking with SBI state bank of india
    then just you can apply by seeing E -Services in that ASBA
    application for the Debt IPO with relevent fields inputted like
    what series like you like to invest
    means monthly or quarterly or annual with duration of investment
    after that you can be sure only when all subscription is fulfilled then the application amount be processed till then it be in your SB account as parked funds like lien ,,,if for eg if subscription is not fulfilled then the balance in SB ac be reflected of that amount .

    your DP ID and others be already filled so just selection
    by this way also you can apply

    just sharing my experience .
    you can reach out to your branch Bank and affirm all so you are well aware of process in person

  • Ajai

    sir,
    please clear this doubt as i am new to this field..

    can i apply this ugrow NCD thru my broker (geojit) platform or is there any other window available?

    i have checked in my broker platform and saw it same like purchasing a stock. My doubt is that if i purchased and i am willing to keep for 1year, how the interest will be credited to my account as i prefer “series 1” quarterly.

    thanks

    • Hello Ajay, Yes it is like buying any other stock. Just ensure you don’t buy from secondary market (unless it is coming lower price). I am not sure about exact path in Geojit, but you can talk to customer care. The NCD interest would be credited to demat account linked bank account on the date of interest

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