UGRO Capital profit falls 14% as impairment charges rise

UGRO Capital Limited reported standalone profit of Rs 37.3698 crore for the quarter ended September 30, 2026, down 14% from Rs 43.3112 crore a year earlier, as impairment on financial instruments rose 91% to Rs 84.7026 crore and finance costs increased to Rs 264.7882 crore.

Why did UGRO Capital’s quarterly profit decline?

UGRO Capital’s quarterly profit declined because higher impairment charges and finance costs exceeded the increase in total income. Total income rose to Rs 495.5084 crore in the quarter ended September 30, 2026, from Rs 461.1799 crore a year earlier, while total expenses increased to Rs 445.5702 crore from Rs 400.0751 crore.

Profit before tax fell to Rs 49.9382 crore from Rs 61.1048 crore in the September 2025 quarter. Impairment on financial instruments increased by Rs 40.4076 crore year on year, while finance costs rose by Rs 46.2426 crore. Together, these two costs increased by Rs 86.6502 crore, compared with a Rs 34.3285 crore increase in total income.

Tax expense was Rs 12.5684 crore in the latest quarter, compared with Rs 17.7936 crore a year earlier. Basic earnings per equity share fell to Rs 2.45 from Rs 3.79, while diluted earnings per share were Rs 2.44, not annualised, against Rs 3.51, not annualised, in the September 2025 quarter.

Which income and expense lines changed in September 2026?

UGRO Capital’s total-income growth was driven by other income and gains on derecognition of financial instruments, while interest income declined. Other income increased to Rs 34.0381 crore from Rs 5.7784 crore, and net gain on derecognition of financial instruments under the amortised-cost category rose to Rs 116.44 crore from Rs 100.6342 crore.

Interest income, the largest revenue component, decreased to Rs 312.5153 crore from Rs 322.363 crore. Fees and commission income also declined to Rs 25.7843 crore from Rs 26.5773 crore, while net gain on fair-value changes increased to Rs 6.7307 crore from Rs 5.827 crore. Total revenue from operations was Rs 461.4703 crore, compared with Rs 455.4015 crore a year earlier.

UGRO Capital’s expenses rose despite reductions in some operating cost lines. Employee benefits expense declined to Rs 30.6231 crore from Rs 67.3067 crore, depreciation and amortisation fell to Rs 9.5795 crore from Rs 14.1397 crore, and other expenses decreased to Rs 53.8768 crore from Rs 55.8179 crore. Those reductions did not offset the combined increase in impairment and finance costs.

Sequentially, profit fell from Rs 60.7146 crore in the quarter ended June 30, 2026, to Rs 37.3698 crore in the September quarter. Impairment increased from Rs 59.9538 crore in June 2026, while finance costs rose from Rs 248.1771 crore and total income increased from Rs 453.9848 crore.

What do the half-year results show?

UGRO Capital’s half-year profit increased to Rs 98.0844 crore for the period ended September 30, 2026, from Rs 77.4416 crore in the corresponding 2025 period, despite a decline in profit before tax. Profit before tax was Rs 98.5987 crore, compared with Rs 109.2735 crore a year earlier.

The difference between the half-year profit and pre-tax trends reflects tax expense. Total tax expense was Rs 0.5143 crore in the six months ended September 30, 2026, compared with Rs 31.8319 crore in the previous corresponding period. Finance costs increased to Rs 512.9653 crore from Rs 423.9197 crore, while impairment on financial instruments rose to Rs 144.6564 crore from Rs 92.0027 crore.

Total income for the half year increased to Rs 949.4932 crore from Rs 883.0094 crore. Interest income declined to Rs 592.8254 crore from Rs 626.5965 crore, but other income increased to Rs 70.6164 crore from Rs 13.606 crore and derecognition gains rose to Rs 216.8568 crore from Rs 191.3854 crore.

The standalone results were reviewed by G. P. Kapadia & Co. for the quarter and half year ended September 30, 2026. The auditor said nothing had come to its attention that caused it to believe the statement had not disclosed the required information or contained a material misstatement.

What do the balance sheet and cash flows show?

UGRO Capital’s standalone loans increased to Rs 9,361.193 crore at September 30, 2026, from Rs 8,314.5282 crore at March 31, 2026. Total assets rose to Rs 13,211.809 crore from Rs 12,346.0975 crore over the same six-month period, while cash and cash equivalents declined to Rs 937.9991 crore from Rs 1,211.1856 crore.

Operating activities used Rs 955.693 crore of cash during the half year, compared with Rs 55.6269 crore used in the corresponding 2025 period. The cash-flow statement records a Rs 993.3904 crore increase in loans, compared with a Rs 34.647 crore decrease in loans in the prior-year period.

Financing activities generated Rs 829.5739 crore of cash, compared with Rs 1,506.8272 crore in the prior-year period. UGRO Capital availed total borrowings and debt securities of Rs 3,467.4267 crore and repaid Rs 2,626.8193 crore. At September 30, 2026, debt securities were Rs 3,341.0324 crore and borrowings other than debt securities were Rs 6,255.8688 crore.

Investing activities used Rs 147.069 crore, compared with Rs 388.435 crore used a year earlier. The company sold or realised investments of Rs 2,657.3725 crore and purchased investments of Rs 2,766.1309 crore, while investments on the balance sheet rose to Rs 1,778.9976 crore from Rs 1,665.0682 crore at March 31, 2026.

What did UGRO Capital disclose on loan transfers and co-lending?

UGRO Capital disclosed aggregate principal outstanding loans of Rs 536.5861 crore to banks and non-banking financial companies during the half year ended September 30, 2026, with aggregate consideration received of Rs 482.9275 crore. The weighted average maturity was 9.03 years and the weighted average holding period was 0.98 years; the disclosure excludes loans transferred through co-lending arrangements.

The filing also records the transfer of 1,036 stressed-loan accounts to an asset reconstruction company. Their aggregate principal outstanding was Rs 200.9494 crore, net book value was Rs 162.8223 crore, and aggregate consideration was Rs 180.8391 crore. Excess provisions reversed to profit and loss on that sale were Rs 18.0167 crore.

As an originating regulated entity, UGRO Capital had four active co-lending partners and 51,260 loan accounts at September 30, 2026. Half-year co-lending disbursements were Rs 958.8102 crore, all in micro, small and medium enterprises, at a weighted average interest rate of 28.91%. The filing reported Rs 957.8809 crore of standard loans and Rs 0.9293 crore of substandard loans.

As a partner regulated entity, UGRO Capital had two active co-lending partners and 132 loan accounts. The related half-year disbursement was Rs 6.5974 crore at a weighted average interest rate of 19.41%, with Rs 6.5974 crore reported as standard loans. The disclosed disbursement amounts include the co-lending partner’s share.

Conclusion

UGRO Capital’s September-quarter standalone earnings decline resulted from a rise in credit impairment and funding costs that exceeded growth in total income. The quarter’s Rs 37.3698 crore profit was lower than a year earlier even as total income rose to Rs 495.5084 crore, and the half-year result showed a different outcome because tax expense fell to Rs 0.5143 crore.

The next results will indicate whether impairment changes from the September-quarter level of Rs 84.7026 crore as loans expand from Rs 8,314.5282 crore at March 31, 2026, to Rs 9,361.193 crore at September 30, 2026. The disclosed Rs 958.8102 crore of co-lending originations, loan-transfer activity and the cash impact of loan growth are also items to watch in subsequent filings.