10.5% U GRO Capital NCD – Sep-22 issue – Quick Review
U GRO Capital is coming up with secured, Senior, Listed and redeemable NCD bonds now. These bonds would open for subscription on 5th September, 2022. U GRO Capital is the systemically important NBFC company in India. The NCD interest rates for U GRO Capital NCD are up to 10.5% and yield up to 11.01%. 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 September, 2022? What are the risk factors one should consider before investing in U GRO NCD 2022?
Also Read: Arthvaya India Nidhi FD offers 10.75% Interest Rates
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 Details for Sep-22 bonds
U GRO Capital NCD opens on Monday, 5th September, 2022 and closes on Thursday, 22nd September, 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 10.15% to 10.5%. Yield on these NCD bonds works out up to 11.01%.
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 of 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 and Tipsons Consultancy Services are the lead managers for the issue.
U GRO Capital NCD – Interest Rates – September-2022 Issue
U GRO Capital NCD – Credit Ratings
U GRO Capital NCD rating is assigned as ACUITE A+ (Outlook: Stable) by Acuite Ratings and Research and CRISIL A- (Outlook: Stable) by Crisil Ratings Limited. Instruments with this rating are considered to have a high degree of safety regarding timely servicing of financial obligations. Such instruments carry very 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
FY2022 – Rs 14.5 Crores
U GRO Capital NCD – Why to invest?
1) U GRO Capital NCD’s offer attractive interest rates where investors can get interest up to 10.5% per annum and yield up to 11.01%.
2) It issues senior and secured NCDs. These NCDs are safe compared to unsecured NCDs. In case a 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.
U GRO Capital NCD – Why not to invest?
1) The impact of a 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. Login to your demat account, check for NCD section and look for this NCD link and apply for the same.
How safe is U GRO Capital NCD?
These NCD bonds are rated as A+ by Accuite and A- by CRISIL. Such credit rating carry very low credit risk. NCD bonds with a credit rating of “A” and above are safer compared to others.
Also Read: TNPFC Fixed Deposits offer 10.46% interest Rates
U GRO Capital NCD – Should you invest?
U GRO Capital NCD of September-2022 issue offers very high interest rates up to 10.5% and yield up to 11.01%. These NCDs are rated as A+ by Accuite Ratings and research and A- Outlook Stable by CRISIL which are considered as good (while AAA rated 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 willing to take risks indicated above can invest in these NCDs.
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I learn that the promoters of U-Grow are the Chokhanis,a fact well hidden from ordinary investors. Chokhanis have floated various companies in the past and disappeared from the scene,eg. Chokhani business Ltd,Chokhani Global Express Ltd,Chokhani International etc. I request that investors do proper home work before investing !
Coupon rate is very attractive for an A rated company. This shows, including the recent scramble for deposits by all banks, that there will be more such issues from better rated companies in coming few months.
Interest rates are expected to rise further in coming quarters too 🙂
In all likelihood, interest rate are going to harden further with one more increase by RBI in its next meeting.
In addition, there is a sudden surge in demand for FDs by banks and NBFCs because they are expecting the coming festival season as a huge credit offtake period and they do not have enough deposits to lend against.
Ugrow ncd vs India bulls ncd
Which is better for investment
Ugro has A+ rating and Indiabulls NCD has AA rating. Hence Indiabulls NCD scores high among these two.