UGRO Capital Q2FY26: Income up 35%, PAT ₹43.3cr

What UGRO Capital reported for Q2FY26

UGRO Capital, a DataTech NBFC focused on MSME lending, reported higher income and profits for Q2FY26 alongside steady asset-quality indicators. Assets Under Management (AUM) stood at ₹12,226 crore, up 20% year-on-year. Net disbursement was ₹1,789 crore for Q2FY26 and ₹3,388 crore for H1FY26.

Total income for Q2FY26 came in at ₹461 crore, up 35% year-on-year, while H1FY26 total income rose 37% year-on-year to ₹883 crore. Profit after tax (PAT) was ₹43.3 crore in Q2FY26, up 27% quarter-on-quarter and 22% year-on-year. For H1FY26, PAT was ₹77.4 crore, up 18% year-on-year.

Asset quality: Stage-1 at 93%, GNPA at 2.4%

UGRO Capital reported Gross NPA (GNPA) of 2.4% and Net NPA (NNPA) of 1.5% on AUM, with a provision coverage ratio of 47%. The company said Stage-1 assets were stable at 93% of AUM, which it highlighted as an indicator of portfolio quality.

It also cited 100% total collection efficiency and conservative provisioning in its commentary around Q2FY26. The combination of Stage-1 share, headline NPA ratios, and provision coverage is central to how the market tracks risk for MSME lenders, especially as disbursements scale.

Management commentary: focus on branch maturity and embedded finance

Shachindra Nath, Founder and Managing Director of UGRO Capital, described Q2FY26 as a period of “strategic recalibration and operational steadiness.” He said the Emerging Market network had reached 303 branches, while the Embedded Finance platform was scaling.

He added that as branches mature over the next six quarters and Embedded Finance deepens, UGRO Capital sees a pathway to return on assets (ROA) expansion. Nath also pointed to the Profectus Capital acquisition and continued investment in the company’s DataTech underwriting architecture as steps to strengthen its MSME lending position.

Q1FY26 context: growth with a stable risk profile

In a separate update for the quarter ended June 30, 2025 (Q1FY26), UGRO Capital reported AUM of ₹12,081 crore, up 31% year-on-year. Total income for Q1FY26 stood at ₹421.8 crore, up 40% year-on-year and 2% quarter-on-quarter, while PAT was ₹34.1 crore, up 12% year-on-year.

UGRO Capital reported disbursements of ₹1,599 crore in Q1FY26. Portfolio quality was described as stable, with GNPA/NNPA at 2.5%/1.7% on total AUM in that quarter.

Embedded Finance and Emerging Markets: what the numbers show

UGRO Capital said Embedded Finance AUM reached ₹1,011 crore in Q1FY26, with ₹582 crore disbursed in Q1FY26 through the MSL platform. For its Emerging Market business, it reported AUM of ₹2,772 crore and 309 branches operational, with 346 branches to be operational by September.

The company has also provided earlier reference points. As of March 31, 2025, it said its embedded finance platform crossed an AUM of ₹700 crore, and separately noted MyShubhlife at ₹743 crore AUM as of March 2025.

Funding and capital position: debt, CRAR, and off-book mix

UGRO Capital reported total debt of ₹7,586 crore as of June 30, 2025. It also reported a capital adequacy ratio (CRAR) of 22.4%, and an off-book share of 42% supported by co-lending and direct assignment flows.

On the partner side, the company said its ecosystem included 17 co-lending partners, 50+ lenders and 770+ GRO partners and Green anchor partners, enabling tailored credit for over 2 lakh MSMEs across India. In its FY25 results communication, it separately cited partnerships with 17 co-lending partners, 59 lenders, over 10 green anchors, and 730+ GRO partners, facilitating solutions for more than 150,000 MSMEs.

Regulatory overhang noted in Q1FY26

UGRO Capital said draft co-lending guidelines issued in April weighed on volumes temporarily in Q1FY26. It added that the impact was cushioned by higher direct assignments and continued liability diversification.

The company’s commentary linked near-term volume variability to the regulatory environment, while stating that it remained focused on keeping asset quality at the center as distribution channels scale.

Track record from FY25: disbursement and profitability highlights

For the quarter and financial year ended March 31, 2025 (Q4FY25 and FY25), UGRO Capital reported AUM of ₹12,003 crore, up 33% year-on-year, and a record quarterly loan origination of ₹2,436 crore in Q4FY25, up 57% year-on-year and 16% quarter-on-quarter.

In FY25, the company reported disbursement of ₹7,651 crore, up 30% year-on-year. Total income for FY25 stood at ₹1,442 crore, up 33% year-on-year, while PAT for FY25 was ₹144 crore, up 21% year-on-year. For Q4FY25, total income was ₹412 crore and PAT was ₹41 crore.

Key numbers at a glance

Why these results matter for investors tracking MSME lenders

UGRO Capital’s Q2FY26 update combines higher total income with an improvement in PAT on both year-on-year and quarter-on-quarter bases. For lenders in the MSME segment, profitability is closely linked to underwriting discipline, collections, and cost of funds, and the company’s disclosures on Stage-1 share and collection efficiency directly address those investor concerns.

The company is also signalling that distribution scale is moving from build-out to maturation, with the Emerging Market branch network described as past 300 branches and embedded finance AUM crossing ₹1,000 crore in Q1FY26. Alongside this, its debt and CRAR disclosures for June 30, 2025 provide context on balance sheet capacity as growth continues.

What to watch next

UGRO Capital’s management has indicated that branch maturity over the next six quarters and deeper embedded-finance funnels are expected to support structural profitability improvement. The company has also highlighted progress on the Profectus Capital acquisition and continued investment in its DataTech underwriting architecture as strategic priorities.

Near-term, investors are likely to monitor how disbursement momentum evolves alongside co-lending rule changes referenced in Q1FY26, and whether asset-quality ratios and provisioning trends remain stable as the loan book expands.