Reasons for Muted Q1 Results for UGRO Capital (Q1 FY25)
- Income on Co-Lending/Direct Assignment Decline:
- There was a significant decrease in income from co-lending and direct assignments, falling by 59% quarter-on-quarter, which impacted total income and profitability.
- Credit Costs Increase:
- Credit costs rose by 58% year-over-year, driven by increased provisioning, which affected the bottom line.
- Higher Interest Expenses:
- Interest expenses grew by 47% YoY, narrowing the net interest margin, contributing to a more muted net total income.
- Operational Expenses:
- Despite a moderate increase in employee costs (48% YoY), other operational expenses showed only an 8% YoY rise, which helped maintain control but did not offset the drop in income from co-lending.
- Lower Loan Origination:
- The overall net loan origination was modest, with adjustments due to reduced disbursements in supply chain financing, which typically contributes to the company’s higher-yield segments.
- Tax Impact:
- A significant reduction in tax expenditure (-60% QoQ) was recorded, primarily due to deferred tax write-offs, which provided some relief but did not significantly boost the PAT.
- Overall Net Income Decline:
- The net total income saw an 18% decline quarter-on-quarter due to the factors mentioned above, leading to a more muted performance compared to previous quarters.
These elements combined led to more subdued results for UGRO Capital in Q1 FY25, despite ongoing efforts in branch expansion and operational scaling.
| Subscribe To Our Free Newsletter |
