Ugro is expanding it’s micro enterprise branches by 100 branches this and 150 next year. So by the end of fy25 they should have 250 and by fy26 400 running micro enterprise branches.
This should drive the loan growth and ROA. So, the loan growth shouldn’t be a concern.
Interesting fact:
Credit rating of SBFC from India Ratings is AA- and now Ugro got upgraded to A+. With one more upgrade Ugro will have credit rating same as SBFC, i.e, AA-.
The cost of borrowing for SBFC is 9.23% and for Ugro it is 10.7%. If Ugro performs well, there is a high chance of rating upgrade, same happened with SBFC in 2023.
Rating upgrade is instrumental for any lending business, with every rating upgrade the CoB will decrease and the spread will increase, and hence the profitability will go multi-fold.
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