Target: ₹276

CMP: ₹163.40 

Ugro Capital has pioneered the “lending as a service” (LaaS) model in India. Its technology architecture allows for customised sourcing platforms for each sourcing channel: GRO Plus module, which has uberised intermediated sourcing; GRO Chain, a supply chain financing platform with automated end-to-end approval and flow of invoices; GRO Xstream platform for co-lending, an upstream and downstream integration with fintechs and liability providers; and GRO Xapplication to deliver embedded financing option to MSMEs.

The company has also developed an underwriting framework GRO Score 2.0 (combining credit bureau and banking data into one model). The credit scoring model — a statistical framework using AI- / ML-driven statistical model to risk-rank customers — is revolutionising the MSME credit by providing on-tap financing like consumer financing in India.

The company, which raised over ₹900-crore capital in 2018, aims to capture 1 per cent market share and cross ₹20,000 crore of AUM with RoE (avg) of 18 per cent by FY25.

At CMP of ₹163.40, the stock is valued at a P/BV of 1.20x (Book Value per share as on H1FY23 - ₹137.75). We recommend a “Buy” with a target price of ₹276 (P/BV multiple of 2x at H1FY23 Book Value).