UGRO says existing LAP branches support Rs 3,300 crore

UGRO said its 317-branch Emerging Market loan against property network could support about Rs 3,300 crore of annual disbursals without new branches if every location reaches the Rs 86 lakh monthly output achieved by branches operating for more than 12 months. Average branch output was Rs 73 lakh in the current quarter.

How can UGRO reach Rs 3,300 crore of LAP disbursals?

UGRO can reach about Rs 3,300 crore of annual Emerging Market LAP disbursals by raising branch productivity to the level already achieved by its mature locations. The network comprised 317 branches across 13 states, supported by more than 1,800 sales executives and over 500 field collection officers. Management said the branch build-out was complete and further growth would not require additional outlets.

Average monthly disbursal per branch rose to about Rs 73 lakh in the current quarter, from Rs 62 lakh in the previous quarter and Rs 48 lakh in FY26. Branches older than 12 months disbursed about Rs 86 lakh a month. Applying that mature-branch output across 317 branches produces management's estimate of about Rs 3,300 crore a year, versus an annualised run rate of about Rs 2,800 crore in the current quarter.

UGRO's nearer-term target is to lift average branch productivity to Rs 80 lakh to Rs 85 lakh per month over the next few months. Management said this would involve little addition to fixed cost because the physical network and field workforce are already in place. The target is therefore an operating plan rather than a commitment to open more branches.

What has changed in UGRO's LAP business?

UGRO's Emerging Market LAP assets under management (AUM) reached Rs 4,268 crore, up 10% in the quarter and 42% over the year. Quarterly disbursals rose to Rs 692 crore from Rs 592 crore in the prior quarter. The business provides property-backed loans to small-business owners in smaller towns, typically with loan tickets of Rs 17 lakh to Rs 19 lakh.

The loans are secured at loan-to-value ratios of up to 75%, according to management. LAP portfolio yield was about 18.4% and gross non-performing assets (gross NPA) were 2%. Management said annual credit cost in the business is 1.5% to 2%, while the longer-term nature of the loans is matched with its long-term borrowings.

LAP is one of UGRO's two focus businesses following the February 2026 reset, alongside embedded merchant-finance platform GROx. Together, Emerging Market LAP and GROx represented Rs 7,929 crore, or 53%, of total AUM of Rs 15,019 crore. Their share was 32% nine months earlier, as UGRO redirected capital and staff away from its defocused intermediated lending portfolio.

Which UGRO branches have the most productivity headroom?

UGRO's newer branches provide the largest scope for productivity gains because their output remains below that of mature locations. The number of branches older than 12 months increased to 107 in September from 81 in March, and these mature branches disbursed about Rs 86 lakh a month each. That demonstrated performance underpins the company's network-wide Rs 3,300 crore annual estimate.

About 200 branches were around one year old, including 138 branches that were less than six months old, and these newer locations disbursed about Rs 60 lakh a month. The Rs 26 lakh gap against the mature-branch monthly level helps explain management's focus on branch seasoning, sales execution and collections rather than distribution expansion.

UGRO said LAP collections operate through four lines of defence, including a large in-house field team, with about 99% of collections received digitally. LAP gross NPA of 2% compared with gross NPA of 1.7% across the two focus businesses and 3.9% in the defocused book. The collection structure is therefore part of the model management is using while newer branches scale up.

How does UGRO's LAP business compare with GROx?

UGRO's LAP business is longer-tenure and secured, whereas GROx provides shorter-tenure merchant loans through partner payment applications. GROx AUM reached Rs 3,661 crore, up 22% in the quarter and from Rs 1,270 crore 12 months earlier. LAP remained the larger of the two books at Rs 4,268 crore, but its quarterly AUM growth rate was 10%.

GROx disbursed Rs 2,253 crore in the current quarter, compared with Rs 1,853 crore in the previous quarter, and was disbursing about Rs 750 crore, or roughly 83,000 loans, each month. Its typical loan was just under Rs 1 lakh with a tenure of about 13 months. GROx portfolio yield was about 26% and gross NPA was 1.4%, compared with LAP's 18.4% yield and 2% gross NPA.

The distribution models also differ. LAP uses the 317-branch network, while GROx is distributed through payment and ecosystem partners, which management said can add merchants without branches. About 95% of GROx repayments are collected daily at source; management said its operating cost is about 1% of AUM, while annual credit cost is about 3.5% to 4% and shared with partners.

What could determine whether UGRO delivers its branch productivity plan?

UGRO's ability to deliver the branch productivity plan depends on newer locations moving toward mature-branch output while credit costs stay within expected losses. Management has guided for annual growth of 20% to 30% in Emerging Market LAP and 35% to 40% in GROx. It also said credit cost would be monitored more closely as newer LAP and GROx portfolios season.

Company-level credit cost was Rs 86.9 crore in the current quarter, compared with Rs 65.6 crore in the previous quarter. That equalled 3.6% of average on-book loans, up from 2.8%, with management attributing the increase largely to the seasoning of newer Emerging Market LAP and GROx loans. Operating expenses were Rs 127.2 crore, down 7% year on year but up 7% sequentially, partly due to higher GROx volume-linked costs.

UGRO said quarterly operating cost had declined from Rs 205 crore in the fourth quarter of FY26 to Rs 127 crore in the current quarter, in line with FY27 guidance of Rs 490 crore or above. Its FY29 objective is return on assets of 3% to 3.5%, versus 2.7% on a first-half pro forma basis. Management said that objective depends on focused-business growth, credit costs remaining within expected losses and operating costs being controlled as volumes rise.

Conclusion

UGRO's Rs 3,300 crore LAP disbursal estimate is based on lifting the existing 317-branch network toward its mature-branch productivity, not on further branch expansion. Average output of Rs 73 lakh per month remains below the Rs 86 lakh achieved by mature locations, while newer branches were disbursing about Rs 60 lakh. The difference provides the operational headroom for the company's secured-lending growth plan.

The next measures to watch are progress toward the Rs 80 lakh to Rs 85 lakh monthly average productivity target, the 20% to 30% LAP growth guidance and credit costs as newer loans season. Management also said the Profectus Capital merger had a National Company Law Tribunal final hearing scheduled for 20 November and that it would publish merger-restated financials over the following two quarters once the scheme is sanctioned.